A fund investor has a straightforward choice: hold or sell. With a model portfolio, a client can change fund manager but request that the holdings are transferred in specie, so giving the new manager the opportunity to retain holdings if they wish.
Investors can buy units in a fund directly from managers or through an investment platform. Clients who wish to own a model portfolio can take a similar approach but are almost certain to require regulated financial advice to ensure suitability.
As a model is a collection of individual investments, it can be more difficult to replicate the model portfolio across a number of platforms if one of the holdings is closed to new investors. Certain platforms may not host the model but will accept the fund and the minimum investment amount will, in most cases, be less for a fund than a model portfolio.
Eric Clapton is managing director of Wellian Investment Solutions
Adviser view
Patrick Connolly, certified financial planner at Chase de Vere, says: “Most clients should look to invest across different asset classes. A multi-asset fund is a sensible way to achieve this for those with smaller portfolios or where there isn’t the scope to continually review individual funds. Multi-manager funds, in theory, give access to the best underlying managers, although charges can be high and are often not justified by performance.”
