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Tilney to target financial advisers with new ‘Smart Beta’ multi-asset fund range


Investment manager Tilney for Intermediaries is planning to launch a new range of risk graded, low cost multi-asset funds. The new funds will combine an active asset allocation overlay with investment through the next generation of passive funds, also known as ‘smart beta’ funds.

Tilney expects to launch its new fund range in the first quarter of 2016, subject to FCA approval.
Tilney says the range will be designed to meet growing demand from financial advisers for lower cost investment solutions but without the inherent limitations of deploying solely through traditional passive strategies. Traditional index-tracking strategies weight exposure to individual securities solely on market capitalisation, which by definition does not distinguish between overvalued and undervalued companies and guarantees underperformance once fees are deducted. Traditional market-capitalisation based passive strategies will also fully participate in any market declines. 
In contrast, the new Tilney range will make use of a new generation of “smart beta” or “advanced” passive strategies that have emerged in recent years, which re-weight baskets of investments on variety of criteria other than market capitalisation. These can include strategies which weight exposure on fundamental factors such as book value, dividends, earnings, cash flow and balance sheet strength.
Miles Robinson (pictured), Head of Tilney for Intermediaries, says: “There’s a clear increase in demand from advisers for lower cost investment solutions, but many advisers also recognise there are significant drawbacks with traditional passive products, which leave their clients assets fully exposed to the risks of valuation bubbles and also losses in overall market downturns.
“In developing an innovative solution for financial advisers, we plan to combine the same discipline and successful approach to active asset allocation which has proven successful with the existing Multi-Asset Portfolio fund range, with investment selection that makes use of the ‘next-generation’ of passive investment strategies. Use of these strategies will enable us to better reflect our thematic views, while mitigating the costs and uncertainties associated with selection of actively managed funds. The portfolios will represent an evolution in the market from the plethora of traditional passive-only, multi-asset funds.”

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