This week Gillian met up with John Jackson of Cornelian Asset Managers to talk about their recent fund launch.
DISCUS. John, congratulations from DISCUS on reaching £1billion under management in 2016 – a major milestone for the business. We also noticed the launch of the new Risk Managed Passive funds so were keen to find out more. Cornelian has traditionally been known as an ‘active’ fund house so what prompted the move into passives?
John Jackson (JJ). Thanks for your congratulations on our assets under management, thanks to everyone in our business it was a great achievement and we look forward to the next one!
Asset growth in the existing risk managed funds range is extremely strong and we hope to experience the same with the new funds. Our key objective is to add real value for investors and we believe that in order to do this we need to be freed from constraint in our selection of asset classes for our funds.
We are active in our asset allocation across the different asset classes using an upper risk limit as our maximum risk budget. In the existing risk managed funds range we populate each asset class with our “best pick” in terms of investment and although we will sometimes use passives our selection tends to be in actives where we can find good active managers that we believe will add value. However, we recognise that for some investors, cost has a high priority and that there is a demand for our style of unconstrained and active allocation across asset classes but for lower cost, predominantly passive investment selection.
DISCUS. Do the funds operate in the same way as the risk managed funds?
JJ. Yes! The new funds have the same basic characteristics and are managed by the same investment team who manage the existing multi-asset funds. Our goal is to add real value for investors – hence the RPI+ returns and we are active in the overall asset allocation, each fund is also managed to sit below upper expected volatility limits and align to the Distribution Technology risk scale from 3 to 7. Like their multi-asset counterparts, the RMP funds are unconstrained which means that our investment team manage the funds with no lower risk limit, no strategic asset allocation and no fixed or minimum asset allocations.
DISCUS. You mention that they are aligned to Distribution Technology but I notice that you explain risk levels of the funds as A to E, can you explain these?
JJ. In order to assist investors to understand how much risk may be taken by each fund, we link each one to a Cornelian risk level from A to E with A being the lowest risk and E being the highest. These levels specify the upper expected volatility limit under which the fund will be managed and correspond to the Distribution Technology risk profiles of 3 through to 7.
DISCUS. What has been the response from advisers to date?
JJ. The fund range was launched in response to adviser demand for a lower cost option and we are delighted with the initial response from advisers and are seeing a steady growth in the funds. Over the first few weeks we have extended our presence across many platforms and hope to have full coverage by the end of January .
DISCUS. Will the funds be used within any of the other Cornelian propositions?
JJ. No, we believe that the majority of investors who will benefit from the RMP range will be investing using a platform so the funds will not be available through our discretionary propositions.
DISCUS. Last but not least, what type of support is available for financial advisers who use the funds?
JJ. Advisers will be sent our regular trading updates which outline all the trading activity in the funds, as we as invitations to our quarterly interactive Investment webinars – the next one will be held on Tuesday, 31st January register for the session here. Factsheets for each fund detailing asset allocation and fund holdings are also produced monthly and available on our website.
DISCUS. John, thanks for your time and we look forward to monitoring the success of the funds. For more information, head on over to our Compare tool where information on the new range is now available!