Wealth manager Brewin Dolphin has completed two of four transfers into manager-of-manager segregated mandate strategies as part of its restructure of its managed portfolio service (MPS).
Brewin Dolphin has transferred around £750m of the £1.5bn from third-party retail funds into its new segregated investment mandates.
It announced the move in January, saying the aim of the exercise was to reduce costs on the firm's MPS by £3m a year. It said cost saving had already started and clients should expect to benefit from the full annual saving when the last two transfers are completed in April and May.
The expected reduction will be passed on to advisers' clients through the ongoing charges figure (OCF) of the underlying fund holdings. Brewin Dolphin said transaction costs were also expected to decrease due to lower portfolio turnover.
The largest reduction will be on the Global Equity portfolio, which will see the OCF drop by 27% from 69bps to 51bps.
Brewin Dolphin went on to claim the process had already saved advised clients an estimated £150,000 in transaction costs through institutional cross trades because two fund managers were able to match around £45m with a seller of the same assets.
"By ‘swapping' the assets with the seller rather than buying them on the open market, we have avoiding significant purchasing costs," said Brewin Dolphin investment solutions and distribution managing director Robin Beer (pictured). "That is another advantage of our manager-of-managers approach."
The four underlying manager-of-manager funds, which were launched in February, cover UK equities, UK equity income, North American equities and global bonds. Managers include Gervais Williams of Miton, Henry Dixon of Man GLG, Tom Slater of Baillie Gifford, Nick Train of Lindsell Train and Neil Woodford.
Segregated mandates to double AUM
In November, Fidelity shifted to segregated mandates on its multi-asset funds in order to cut costs and gain access to a wider investment universe.
For its part, IFA consolidator AFH launched six segregated mandates in the second half of 2017. The firm's chief executive Alan Hudson recently said he believed the advice sector had not yet "grasped the significance" of this proposition.
NextWealth, a research and consultancy firm set up by former Platforum head Heather Hopkins, recently foresaw segregated mandates doubling their assets under management in the discretionary and wealth manager markets - growing to around £180bn over the next two years.
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