At PortfolioMetrix, innovation is in our DNA. We’re always exploring smarter ways to enhance client results. Among our
cutting-edge investment strategies is an approach we call Efficient MPS.
By harnessing the benefits of constructing portfolios using multi-asset funds (MAFs) as the underlying building blocks,
we achieve superior outcomes for our clients. This approach is unique in the UK market
Moving Away from the Inefficiencies of MPS
In a recent interview with Nicola Blackburn from Citywire New Model Adviser, our Managing Director, Ben Peele discussed the market trend of advisers moving away from the inconsistencies and inefficiencies of MPS, towards multi-asset funds.
In the interview, Ben describes PortfolioMetrix’s approach to mitigating the shortfalls of MPS, using multi-asset funds as the underlying building blocks to construct the model portfolios, offering numerous tax and operational benefits.
Citywire New Model Adviser: Efficient MPS
Benefits of Efficient MPS
Efficient MPS has several advantages over traditional methods. The benefits below explain why PortfolioMetrix
implemented Efficient MPS and why advisers have received it so well.
| Benefits of Efficient MPS | |
| Consistency | With Efficient MPS, you can use the same underlying funds across all platforms, ensuring that your investment strategies stay consistent for all clients. There’s no need to compromise on your optimal fund selection or juggle multiple share classes due to platform constraints |
| Accessibility | A key hurdle in traditional MPS is gaining platform access for underlying investments, particularly offshore bonds. Each bond provider has its own approved fund list, posing a challenge for constructing models and diversifying portfolios. Additionally, not all platforms provide access to ETFs, which can also attract high trading costs on platforms. Efficient MPS overcomes these obstacles by securing approval from bond providers for our Multi-Asset Funds and incorporating ETFs within our funds, eliminating any need for substitutes or concessions. |
| Purchasing Power | A significant drawback of traditional MPS is that certain platforms can’t ringfence share classes, causing investors to pay varying fees for identical funds based on the platform they choose. Efficient MPS resolves this issue by leveraging our Multi-Asset Funds, ensuring all investors access the lowest fee class for the underlying funds. Additionally, any rebates we secure within our Multi-Asset funds are directly passed to the investors, a benefit that traditional MPS platforms typically cannot offer. |
| Operational | Efficient MPS offers a faster and more adaptable investment approach versus traditional methods, which frequently suffer from delays and prolonged fund loading times because of lengthy setup periods. Such problems can impede prompt decision-making and market access. With Efficient MPS, we can open accounts in our Multi-Asset Funds quickly and make investments without any market disruption. Additionally, we simplify buying and selling processes and transaction settlements which enhances liquidity. It also reduces out-of-the-market risk. |
| MPS Fees | Efficient MPS simplifies the fee process, as the investment management fee is already included in the Multi-Asset Funds we utilise when building our portfolios. This contrasts with traditional MPS, which adds an explicit MPS fee on top. |
| Transparency | Opting for Multi-Asset Funds in an Efficient MPS allows you to monitor your investment performance daily. An independent fund administrator rigorously checks and reports the underlying Multi-Asset fund performance every day, offering full transparency. Conventional MPS are more opaque, fee structures and their impact on returns can be confusing and frequency of reporting is variable. With Efficient MPS, you gain confidence knowing that the performance data is both precise and transparent. |
| Tax Efficiency | With General Investment Accounts (GIAs), rebalancing through traditional MPS can deplete your Capital Gains Tax (CGT) allowance as the year progresses. By opting for Efficient MPS using Multi-Asset Funds, gains are only recognised when the fund is sold, allowing advisers to better manage their clients’ tax impacts. |
Some of these benefits have been discussed in more detail here:
Citywire New Model Adviser: Benefits of Efficient MPS
Download the Case Study
Our case study of Mr Efficient and Mr Traditional best illustrates the benefits of Efficient MPS. You can download the case study for free here:
Contact our team today to learn how we can help you achieve your financial goals.