OEIC: NURs or UCITs?
It all depends on what the objectives of the fund are and what the fund is hoping to achieve in the long term.
The journey for many creating a fund starts with those who are managing investments through model portfolios.
New entrant clients are often unsure what is required to move the model portfolios into a fund (s), Lloyd Expert Consultancy is ideally placed to provide this guidance, information and implementation.
Funds are a cost efficient and effective way of managing client money, so it is no surprise the increase in activity we are seeing from wealth managers wanting to convert model portfolios into funds. Not only does it make it more efficient and effective to manage for the client but benefits the firm as well.
Typical Unitisation Client
3 simple processes to unitisation.
General Investment Products
Investment Universe
MPS
Model Portfolio Selection (MPS Refinement Selection)
Fund
Dedicated Fund Management
Benefits for Investors
- Tax efficiency - CGT exemption – once within the OEIC structure all trading and rebalancing does not trigger a CGT event - Potential significant savings for larger investors
- Tax efficiency on Investment management fees – These are VAT exempt within an OEIC structure
- Investment management access to better deals on funds they are investing in
- Quicker investment alteration - all clients can benefit from investment changes by not being restricted by settlement period delays
- Efficient solution allowing the DFM to meet investors needs in the future
- Clear and transparent reporting reducing risk being in a safe investment vehicle in a highly regulated environment
- Lower fund of fund fees as individual negotiations with managers within an OEIC structure are achieved over an MPS solution that is restricted to the platform fees
- Access to better share class of FoF investments
Benefits for Sponsors
- An OEIC Solution will provide more time for client advisors to spend with existing clients, nurturing and maintaining whilst the result of outsourcing the investment burden of committees and investment decisions will be taken elsewhere
- The extra time gained may result in the onboarding of new clients bringing addition revenue as a result
- Operational efficiency benefits including simpler CIP with funds designed to reduce the number of current portfolio deviations
- Operational efficiency in fully inclusive solutions (removal of need for Tax and “Non-tax” portfolios and other segregated bespoke solutions)
- Incorporated company asset – company asset value to Sponsor
- Lower error rates for managing investments through an OEIC versus a traditional MPS as the rebalancing or trade execution will be done across all investors at once
- Options of wider distribution solutions - ideal cost-effective home for the next generation clients – new clients can be added without the need for additional resource
Fund Manager and Sponsor
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