Increasingly our clients are availing themselves of investment platforms. Why wouldn’t they – it’s a win-win situation:
- The platform provider makes a small charge but negotiates lower fund manager fees for the investor
- So that investors can enjoy more options, greater flexibility and lower portfolio risk for the same or even lower costs
This allows clients who don’t want to go down the fiduciary manager route to, nevertheless, raise their game materially.
An example that we have been discussing with some clients springs to mind.
- These clients have held off adding leveraged interest rate protection for fear of missing out on the benefit of future rate rises.
- However, the spectre of populist disruption across European elections makes almost all of us fear the worst. Should Mr Corbyn get in and Mrs Merkel miss out then no amount of hawkish Fedspeak will stop Gilt yields falling.
But if the outcome in the UK and the “eventualité” in Europe is that electorates vote for the status quo then interest rate normalisation could be back on the table.
The thought of being able to put hedges on and take them off efficiently is therefore very attractive. Trustees should not pay lip-service to dynamic funding level management, they should commit to it.
Our View : Holding assets on an investment platform removes key obstacles to trustees managing funding levels better.