F&C Lifestyle range attracts larger advisers on back of RDR

F&C has seen a significant shift in the type of IFAs using its Lifestyle fund range as a result of changes brought by the RDR.

As they reach their third birthday, the four Lifestyle funds are increasingly being used by large regional advisers and networks rather than just smaller IFAs, the group says.

Head of multi-manager Dean Cheeseman believes the change to a fee-based system is encouraging IFAs to rethink their business models.

“The legislative changes are driving IFAs down a particular business model which ensures the client’s and intermediary’s interests are closely aligned,” he says.

“The Lifestyle funds free the intermediary to do what he does best, which is to understand the client.”

UK retail head of proposition Philip Martin says the funds are increasingly used by larger IFA firms including Bluefin, Lighthouse and Kellands.

“When the funds were launched they were seen as a solution for smaller IFAs. What we have seen over the last six months is we are increasingly having conversations with good quality, large regional IFAs which before were totally off the radar,” he says.

F&C expects this trend to continue and predicts the market for lifestyle products will grow to £2bn by the end of 2010, from the current £880m.

F&C runs four Lifestyle funds – Defensive, Cautious, Balanced and Growth – linked to client risk profiles four through seven. The suite has grown to £242m of assets under management with Cautious and Balanced the largest.

“This is probably systematic of people’s changing risk attitudes since 2007. For a large proportion of the funds’ life there has been quite a dark cloud hanging over the economy,” says Cheeseman.

Asset allocation is based on risk profiling tool Dynamic Planner with F&C’s managers allowed a 5% deviation each way. The funds are rebalanced each quarter.

Cheeseman says the funds are currently in their most neutral position for 18 months, although the bias has shifted away from passive investment.

“We have gone more into stock pickers this year such as Richard Buxton, Neil Woodford, Mark Lyttleton and Adrian Frost. We have also recently introduced active US exposure though the Robeco US Premium Equities fund,” he says.

He believes markets will perform positively this year, though they will remain volatile.