Funds for fee-conscious customers

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Grosvenor Financial Services has launched a stripped down range of funds aimed at investors concerned about fees.

Friday, August 21st 2015, 6:25AM 9 Comments

Grosvenor have launched a new range of investment products designed to meet a particular market need.  Traditionally Grosvenor have provided full service premium investment solutions.  The new range will see them extend the offering to include a simplified investment option.

Chief investment officer David Beattie said, “We have listened to our advisers.  They have clients with varying needs.  Some are new to investing, some are looking for something to complement their existing portfolio and some want to take a more active role in managing their investments.  That’s where the Focus series comes in.”

The series is a range of four multi-sector growth funds.  It is designed for investors looking to gain market exposure but with a lower level of active management.  Clients can access the funds with a small initial investment and will receive a basic reporting package.

Beattie said the series appeals to three types of investors: The DIY, non-believers in alpha, The high net wort client with a private banker hovering close by and truly, high-fee sensitive client.

He says Grosvenor's premium service includes active management, but much of that has been stripped out in the new series so it gives investors good market exposure. He says there is little point in getting into the debate on whether active management delivers, rather the goal was to develop a well-priced product which appeals to the non-beleivers.

"We try not get into the fundamentalist debate " around active versus passive management. He says the debate will roll on forever and "there's no real answer to it".

The series is deliberately priced in a way which makes it similar to what investors pay for private banking, which may help independent advisers win these prospects over.

Beattie acknowledges there is pressure on fees, especially as interest rates stay low. He says investors will struggle to fund an equivalent product with active management and this level of pricing.

The investment management fees are 1.45% and 1.55% for the balanced and hihh growth funds respectively and that includes the adviser's trail fee.

Grosvenor will also shortly launch a complementary SPECIALIST Series.  “This series is made up of four thematic funds which utilise the growing range of exchange traded funds.  It’s these funds that will really allow investors to tailor their investments by adding some exposure to specialised global investment themes," Beattie says.

The funds will initially target the Healthcare, Technology, Precious Metals and Resource Sustainability sectors, but will be added to based on demand for exposure to other themes. Grosvenor will research and select the most appropriate ETFs to include in each of the SPECIALIST series funds and wrap a PIE structure around them.  This will allow previously inaccessible funds to be available to New Zealand investors in a tax-effective structure.

Grosvenor’s long standing INVESTMENT Series has also undergone some tweaks.  “With the introduction of DIMS it was timely to make some changes so it was easier for advisers to administer.  While we were at it, we added three Socially Responsible Funds.”  The move follows Grosvenor’s experience with the popularity of its Socially Responsible KiwiSaver funds.

As a premium offer, Grosvenor’s INVESTMENT Series spans 14 funds, all built on an index-enhanced investment philosophy.  Central to this philosophy is focused downside risk management.  The new Focus Series is differentiated by greater index based underlying investments and minimal downside risk management.

Tags: David Beattie Grosvenor Financial Services

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