Navigating the Future of Retirement and Pension Planning

Passive investing is on the rise, and passive strategies can provide you and your clients with a low-cost way of gaining access to the investment markets. However, passive investing can have some limitations – market-capitalisation weighted indices can often be highly concentrated and lack diversification and static asset allocation models, which are used in many passive services, lack the flexibility to react to changing market conditions.

But it doesn’t have to be this way. As passive investing has increased in popularity, so has the number of passive funds available, with many now offering exposures to other parts of the market. This makes it possible to combine passive funds which invest across a range of different factors and styles to achieve a more diversified portfolio than is possible when using market-cap weighted exposures alone.

By combining this with an active asset allocation framework which can adapt to changing markets, you can capture the low-cost benefits of passive investing while achieving a portfolio which is better diversified and more flexible than many other passive strategies.

Combining index funds for greater flexibility

Evelyn Partners Index Managed Portfolio Service (MPS) range adopts this approach to portfolio construction, combining a range of different index tracking funds to construct a diversified portfolio in line with the Evelyn Partners asset allocation framework. This provides the benefit of active asset allocation with the cost advantages that come with index funds.

Advisers and their clients using the Index MPS service will benefit from Evelyn Partners active asset allocation framework and regular rebalancing. The portfolios are constructed using low-cost index funds and exchange traded products (ETPs). The five portfolios are suited to different risk profiles (from low to high risk) and include: Cautious, Balanced, Growth, Adventurous and Maximum Growth.

Key features of the Index MPS range

• Diversification: Market-capitalisation weighted strategies invest in companies in line with their size (their ‘market-cap’) within the index. This can cause these strategies to be heavily exposed to the biggest companies in the index which has an impact on portfolio diversification. Factor-based strategies can use different weighting methodologies, which provide exposure to other parts of the market, allowing for a greater balance across sectors and styles, The Index MPS range uses both market-cap weighted and factor-based index funds.

• Balanced exposure: By incorporating factor-based index funds, the Index MPS range ensures exposure to under-represented market segments, such as the S&P 500 Equal Weight Index and a fundamentally weighted global equity strategy, which can offer further diversification relative to using market cap weighted strategies on their own.

• A focus in fixed interest: Some funds are exposed to broad fixed interest benchmarks (indices that track the performance of a specific segment of the bond market), which means there’s little control over the duration and credit exposure they take. However, investors in Evelyn Partners Index MPS range get exposed to more focused fixed interest funds to keep duration short and control credit risk, which allows the range to adapt to different market conditions.

• Diverse asset classes: Beyond equities and fixed interest, the Index MPS range includes other asset classes such as gold, which can enhance diversification. Demand for gold has increased and it could remain popular as geopolitical tensions continue.

• Active management with low costs: The Index MPS portfolios are actively managed, which may offer an advantage over other competing other passive strategies which do not adapt to changing market conditions.

• Whole of market fund selection: Some propositions are limited to selecting funds from their own ranges. Evelyn Partners Index MPS range can choose from the entire market allowing it to choose the best-in-class funds when constructing the portfolios.

By combining all the differentiating factors above, Evelyn Partners can proudly say that our Index range is different.

To learn more about Evelyn Partner Index MPS, don’t hesitate to contact our team on the details above.

Dan joined Evelyn Partners in January 2019, when the Moore Stephens Wealth Management Team joined what was then Tilney. Prior to this, Dan ran the passive and factor-based investment proposition at Moore Stephens for 12 years.

Dan is the Portfolio Manager on MPS Index, a member of the Passive Fund Research Group and runs bespoke passive and factor-based portfolios for private clients, corporates, charities and trusts. Dan is a Chartered Financial Analyst and holds the Diploma in Financial Planning.

Get in touch:

0113 244 5911
ifaservices@evelyn.com