Stick to the road…

Last week PortfolioMetrix announced the launch of the Select range of model portfolios. Why is this news? Well, this is the first time the portfolios at the centre of our Core proposition (which advisers can adapt on a few platforms to make bespoke to individual clients), have been made available as set portfolios across a wider range of platforms (10 to be exact).

Why offer the portfolios in this way, when there are already plenty of competing portfolios available? There are two key reasons: 1) advisers kept asking us for them and 2) our investment team has spent many hours looking at what’s already on the market and they believe these seven Select models would offer advisers and clients a step up in reliability and quality.

The main issue we see with some (fairly substantial) model portfolios is that they are a bit like off-road drivers: they ignore the mapped route and appear to use raw instinct rather than a studied combination of art and science to reach their destination. This is all very well if you’re a daredevil passenger who has willingly climbed into a muddy 4×4 in anticipation of thrills and spills during the journey, but rather alarming if you’ve opted for a comfy saloon and expect a smooth ride on the highway.

The model portfolio ‘off roaders’ take risks that go either above or below their badged risk rating, delivering unpredictable risk and return when analysed on an historical basis. This means that advisers and clients will have seen their investments move outside the agreed comfort zones.

What PortfolioMetrix aims to do – and has achieved in our core proposition of portfolios for the past four years – is deliver returns that are aligned to the targeted risk. This strategy should result in advisers and clients getting what they expect, without being given the run-around…or having the wheels come off.