Latest News 27/01/2020
John Jackson discusses the SVS Cornelian Risk Managed Passive Range
Today we’re talking to John Jackson, Managing Director, Intermediary Business, about the SVS Cornelian Risk Managed Passive Range, which recently celebrated its three year anniversary.
John congratulations on the third anniversary of the Risk Managed Passive range (RMP). Cornelian was traditionally known as an ‘active’ fund house so what prompted a move into passives back in 2016?
Thanks for your congratulations and to everyone in our business. It was a great achievement and we look forward to celebrating the next milestone!
Our core Risk Managed Fund Range had received strong support from advisers since its launch in 2010, and we hoped to build on this success by offering an additional range of multi asset funds that, whilst still actively managed, offered a lower-cost investment solution by combining our active asset allocation decisions with predominantly passive underlying investments.
We brought these together in 2016 in a competitively priced product that was designed to appeal to cost-conscious investors, whilst still aligning seamlessly with the suitability process. The RMP funds are managed by the same investment team who manage the existing multi-asset funds.
Are the RMP funds managed in the same way as the risk managed funds?
Yes. Each fund has a specific upper expected volatility limit and is managed to sit below this. Like their counterparts, the RMP funds are unconstrained in terms of asset allocation, which means that our investment team manage the funds with no lower risk limit, no strategic asset allocation and no fixed or minimum allocations.
Each Fund has an RPI+ net total return target, designed to be achieved over the market cycle, that increases with the ability of each fund to take a higher level of risk.
Does the range have any active exposure at all?
Yes - it’s important to highlight that whilst the Range has a strong emphasis on lower cost, index-tracking securities, it has the benefit of being able to gain active exposure in the areas where our Investment Team believe this is particularly beneficial – for example, controlling interest rate sensitivity by investing directly into government bonds, or by gaining active exposure to asset classes like absolute return and infrastructure which can provide a useful source of diversification or inflation-plus returns, but for which no suitable passive investment is available.
What’s key is that we are taking a flexible approach in order to balance overall cost control with the implementation of our asset allocation views.
Can you explain the different risk levels?
Like the Risk Managed Funds, the RMP Range consists of five funds – one for each risk level.
In order to assist investors to understand how much risk may be taken by each fund, we link each one to a Cornelian risk level from A to E with A being the lowest risk and E being the highest. These levels specify the upper expected volatility limit under which the fund will be managed, which corresponds to the upper risk limits of Distribution Technology risk profiles of 3 through to 7. Further information on these levels can be found in our Fund guide.
The Funds are also risk mapped by Distribution Technology, Defaqto and Finametrica.
What has been the response from advisers to date?
The fund range was launched in response to adviser demand for a lower cost option and has seen steady growth.
Are the funds used within any of the other Cornelian propositions?
Yes - whilst our funds are available on most major platforms, they can also be accessed directly within our Cornelian Portfolio Service; designed to be one of the most cost-effective ways for you to access our discretionary services for your clients.
Finally, what type of support is available for financial advisers who use the funds?
Advisers are sent our regular trading updates which outline all the trading activity in the funds, as well as invitations to our quarterly interactive Investment webinars. Reports and factsheets for each fund detailing asset allocation and fund holdings are also produced monthly and available on our website
John, thanks for your time and we look forward to the continued success of the funds. For more information, visit the cornelian website or speak to a member of our Intermediary Team