|Competition In UK Fund Platform Space Heats Up|
|17 September, 2013|
Competition is heating up in the UK fund platform space as an increasing number of providers look to become a one stop shop, doubling up as platform and passive fund provider.
Novia is the latest UK fund platform for financial advisers to take a step into the passive world, by setting up Copia Capital Management, a discretionary fund manager (DFM) service, available on its own platform. It specialises in a passive, fund of fund model. It will be run by Ervin Erdem, who designed and managed the investment systems at Fidelity and Nutmeg.
Novia chief executive Bill Vasilieff said: “We have seen a huge growth in new business inflows into discretionary fund managers and Novia has already developed a strong reputation for its market leading DFM offering.”
Model portfolio functionality has been the driving force behind the growing distribution and sale of exchange traded funds (ETFs) amongst advisers.
But Novia is not the only provider to aim for the one stop shop solution. AXA Elevate is a fund platform which offers its own fund group’s (Architas) passive funds on wrap. 7IM, run by Tom Sheridan, has a similar model. Standard Life also offers its passive MyFolio fund range on its own platform.
Richard Mein, managing partner of Parmenion, which manages passive funds on its own platform, said Novia’s move was “entirely sensible”.
“Good luck to them,” he said. “It will just take time to be able to demonstrate that they can achieve successful outcomes for clients - it’s not easy! We have long believed that integrating DFM capabilities within the platform, not just as a bolt on, was the way to go. It’s been our vision for eight years.”
Other providers do not have their own platform and use third parties to distribute their funds to advisers. One example is Evercore Pan-Asset. Bob Campion, institutional business director, said the market would welcome the competition. Around half of their business comes from model portfolios.
“There are a number of providers who have discretionary managed portfolios on platforms and we have always had quite a lot of competition for that,” he said. “We are not the only one to manage multi asset passive funds so we would take it as reinforcement of the idea that what we are doing is popular and we can see why others have adopted this method.”
Passive investment specialist adviser Andrew Whiteley a passive fund management service, said advisers should consider the regulator’s recent advice to shop around and find the best deal instead of automatically choosing the one stop shop.
“You would try to look for the best solution,” he said. “Whether it’s active or passive, it’s clear that you should make independent fund choices. It’s a question of how worried you are about what the Financial Conduct Authority (FCA) has to say.”