US asset manager Vanguard has launched a blended model portfolio service (MPS). The range consists of five low-cost model portfolios that blend active and index investment strategies, designed for UK financial advisers who wish to combine the dependability of index funds with the potential for outperformance provided by active management.
To deliver the service, Vanguard has extended its longstanding relationship with Wellington Management into the MPS space for the first time, drawing on their deep research and multi-asset heritage.
Gillian Hepburn, head of UK adviser solutions, Vanguard, commented: “Increasingly, advisers we speak to are seeking more choice, as they look to meet the different needs of their client segments. For a growing group of clients, a blend of active and index investing within a single solution is of real interest.”
The five model portfolios invest across equities and fixed income, ranging from a 20% equity exposure to a 100% equity option. The exact asset allocation of each portfolio is determined by Wellington Management using their proprietary research and forecasting expertise to adapt to market conditions over the medium and long-term.
Once established the asset allocation is implemented via a selection of Vanguard and third-party funds, chosen by Vanguard’s oversight and manager search division. The index funds and active fixed income funds in the model portfolios are run by Vanguard, while the active equity component is enacted via carefully selected third parties. These include the likes of Schroders, Lazard, MFS Meridian, Pzena and Jennison.
