How We Use ETFs: Astute Wealth Management

Laura Jones, financial planner at Astute Wealth Management, talks about how her firm incorporates passives within multi-asset funds

Reviewed by: Kirstie Brewer
Edited by: Kirstie Brewer

Laura Jones, financial planner at Astute Wealth Management in Preston, Lancashire, talks to about how her firm incorporates passives within multi-asset funds. How do you use ETFs?

Laura Jones: We don't really pick individual ETFs to incorporate into client portfolios. Instead we use the Vanguard LifeStrategy Funds and the 7IM Asset Allocated multi-asset passive funds that will use ETFs within the investment strategy of the fund. Vanguard use a blend of their index funds and their ETFs. They are currently using ETFs to replicate the FTSE 100 and FTSE 250 as well as the S&P 500. Why don’t you create these multi-asset passive portfolios yourselves?

Jones: We believe the expertise we offer is as financial planners as opposed to being pure investment experts with an in-house team of analysts. We work with the client to understand their attitude to risk, their objectives, their capacity for loss and their time horizon.

We tend to use these funds for clients with assets of less than £150,000 who are looking for a low-cost solution that will seek to maintain a given risk profile, rebalancing as a matter of course within the fund. We then review the funds as a firm on a quarterly basis via our investment committee. We feel that if an asset management firm like Vanguard can offer a multi-asset, low-cost solution using a range of indices then we are better to defer to their expertise as opposed to trying to reinvent the wheel. How much do these funds cost?

Jones: Vanguard are typically 0.24 percent per annum, while 7IM are 0.68 percent with a discount of 0.25 percent if they are accessed via the 7IM platform. Does your investment strategy consist of just these multi asset funds, or anything else?

Jones: The firm investment strategy has a three-tiered approach – multi-asset fund of funds, both passive and active, model portfolios and referrals to a discretionary fund manager. The investment solution would depend on the needs of the client, their assets under management, their time horizon and their tax planning requirements. Why don't you use ETFs directly? Is there a situation where you would?

Jones: We look to investment specialists for advice, support or outsourced management. There are ongoing dealing costs in developing a portfolio of ETFs which could make it less cost effective for clients with lower sums to invest. Our main belief is that if the solution can be provided by an asset management firm that has a good track record, why try ourselves to recreate something that is already being done effectively?