Wealth management group Fairstone is building on the success of one of its MPS ranges by converting four of the portfolios into funds. The move will cut client charges by up to 20%.

The change involves four portfolios in the Fairstone Systematic Powered by Dimensional MPS range and reflects the success of these globally diversified low-cost portfolios.

They have been converted into the new IFSL Fairstone Systematic funds, with combined assets under management of around £600m.

The MPS portfolios with risk-ratings 4 to 7 have been converted – or ‘unitised’ – with their assets transferred into the four new multi-asset funds.

Fairstone expects the ongoing charges figure (OCF) for the portfolios to be cut by around 20% from between 0.42% and 0.43% to a target of between 0.33% and 0.34% for the new funds. In addition, the funds will offer Capital Gains Tax benefits for investors holding them outside a SIPP or ISA.

The company appointed the Marlborough Group’s Investment Fund Services (IFSL) as the funds’ authorised corporate director (ACD) to help launch the funds. Now they have been launched, IFSL will provide oversight to protect the best interests of investors and has ultimate regulatory responsibility to the Financial Conduct Authority (FCA).

Fairstone has appointed Dimensional Fund Advisers as the sub-investment manager for the funds, with responsibility for day-to-day investment decisions.

The funds will continue to use academic research and a rules-based approach designed to help investors capture long-term market returns in a consistent and disciplined way.

Nick Stebbing, Chief Product & Proposition Officer at Fairstone, said: “This evolution underlines Fairstone’s role as a professional buyer, using our scale, structure and buying power to secure better outcomes for advisers and clients, and continually improving where we can.

“By leveraging the operational flexibility of the fund structure and our buying power, we can deliver lower overall costs to clients right across the board with no compromise to philosophy or implementation. This is another strong step forward for the Fairstone Systematic proposition – improving value, efficiency and client outcomes.

“We’re very pleased with how the whole process of launching the funds has gone. IFSL and the wider Marlborough Group are respected names in the industry and, as well as their breadth and depth of expertise, the team have been great to work with and have a real ‘can do’ approach. We believe they’re a strong partner to support Fairstone as we continue our growth story.”  

Martin Ratcliffe, Co-CEO of Investment Fund Services, said: “We’re delighted to have been selected by Fairstone to help them launch their new funds. Now they’re up and running, we’ll continue to work in partnership with the team at Fairstone, providing expertise and oversight to help safeguard the best interests of the funds’ investors.

“The role of the ACD is an important one and we take our responsibilities very seriously. Alongside robust oversight and governance, we provide expert guidance and support for our partner businesses throughout the process of designing, launching and operating funds.

“We’re committed to working with businesses who share our client-focused approach, helping them grow by delivering great outcomes for their clients. We’re looking forward to a successful long-term partnership with the team at Fairstone.”

The IFSL Fairstone Systematic 4 and IFSL Fairstone Systematic 5 funds are in the Investment Association’s Mixed Investment 20-60% Shares sector. The IFSL Fairstone Systematic 6 and IFSL Fairstone Systematic 7 funds are in the IA Mixed Investment 40-85% Shares sector.

The two remaining Systematic MPS portfolios – with combined assets of around £10m – will see their discretionary fund management (DFM) fees fall from 0.15% to 0.07%. As a result, their total costs also fall, with Fairstone Systematic Powered by Dimensional Risk Level 3 falling from 0.41% to 0.33% and Fairstone Systematic Powered by Dimensional 8 falling from 0.44% to 0.36%.

Fairstone’s investment management arm administers a range of managed portfolios. It has maintained a five-star Defaqto rating for its core model portfolios for nine consecutive years.

Fairstone is one of the fastest-growing financial services organisations in the UK and Ireland, operating from 50 locations and with over 1,350 operational staff and regulated advisers. It oversees more than £22 billion in assets under management on behalf of over 125,000 clients.

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