Investec has reached an agreement with UK investment platform Cofunds to include the bank’s Qtrac Funds range in its offering for independent financial advisers (IFAs) and retail investors.
The Qtrac Funds range, which is also available via UK wrap platforms Transact and Novia as well as most SIPP and offshore bond provider platforms, was launched in November 2013 and comprises the UK Controlled Volatility and the Income Booster Funds.
“We want to make sure we work with the main platforms in the country and the agreement with Cofunds will be key as our funds reach a much wider audience in the intermediary market,” said Gary Dale, head of intermediary sales at Investec Structured Products. “It’s been a long process and we wanted to have the right agreement in place. These funds, in particular, the UK Controlled Volatility Fund, have been incredibly well received by advisers and discretionary managers, but accessibility has always been an issue. We are also working with Fidelity to get our funds on their platform.
“This only affects our fund range, but we believe that platforms will play an important role in making structured products visible for advisers and discretionary managers,” said Dale. “At the moment, platforms are not ready to administer and manage structured products. Once platforms open up to structured products the market will benefit. Platforms claim there is not enough market but this seems to be one of those Catch 22s. Some advisers say they will not use structured products until they are available on platforms while the latter claim there is not enough demand to justify their addition.”
The addition of Investec’s funds is in line with the Cofunds platform’s focus on attracting “the best funds the industry has to offer” to meet the needs of both advisers and investors alike, said Andy Coleman, director of distribution at Cofunds.
The funds available through Cofunds are sub-funds of an open-ended investment company (OEIC) authorised as a Ucits under Ucits IV regulations. The UK Controlled Volatility Fund aims at providing long-term capital growth while controlling volatility by tracking the performance of the Even 30 Index, a proprietary benchmark developed by Investec comprising the 30 least volatile FTSE100 stocks. The UK Controlled Volatility Fund has delivered a total return of 7.63% from inception in March last year, outperforming the FTSE100 index by 7.68% while being less volatile over the period, said Dale.
The Income Booster Fund is a structured fund aimed at delivering a target quarterly annualised income of 7.5% pa. which follows a passive covered call overwriting strategy linked to the performance of the FTSE100. The Income Booster Fund is collateralised in line with Ucits IV regulations, with collateral in the form of government bonds from six different countries.
Instead of developing a range of structured funds and exchange-traded funds, Investec has focused on launching an OEIC with the idea of building different share classes, said Dale. “The focus is on structures that are commonly understood by the advisory community,” he said. “We believe that the best way to provide funds in the advisory market is by using an OEIC structure wrapped as a Ucits and make it available through wrap platforms.”
Investec Structured Products remains the most active player in the UK structured retail products market with over 900 structured products marketed since 2005. The bank, which sells its products via advisers only, had an estimated market share of 28% and sold an estimated £700m in the intermediary market in 2014.
According to SRP data, Investec sold over 100 structured products among UK IFAs in 2014, of which 35 were fully protected structured deposits and 69 were capital-at-risk structured investments.
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