Canaccord Genuity Wealth Management is turning the discretionary small cap portfolios it runs into a unitised fund as a result of consumer duty requirements.
Canaccord inherited an extensive UK smaller companies desk from its 2016 acquisition of Hargreave Hale, including research analyst Ian Berry and the former small cap fund manager Giles Hargreave.
Wealth management clients of Canaccord, particularly those with a higher risk tolerance, had exposure to the discretionary UK smaller company portfolios constructed by Berry and his colleagues, but as a result of the value for money requirements of the consumer duty regulations, Canaccord have created the Canaccord Genuity Smaller Companies fund.
Clients who previously held smaller company exposure through a portfolio will instead own the same exposure through the above fund.
This particularly applies if they have a portfolio value of less than £100,000.
This will allow clients to have the same exposure in a lower cost way.
The fund is not being marketed to individuals or advisers who are not clients of Canaccord Genuity Wealth Management in the UK, so while it is structured in precisely the same way as any other small cap fund, it does not compete with the Marlborough smaller company funds which Canaccord is contracted to run.
Mike Barrett, consulting director at the Lang Cat, said that while he understood the rationale under the consumer duty rules for unitising a product, he questioned why the cash value of a clients portfolio was relevant.
He said: “I can understand why they might be looking at different client types/sizes for their value assessment. However, whilst consumer duty does encourage this approach I do think it feels a bit strange.
"Is it really fair value if you’ve got £100,001 to invest, but not if you’ve got £99,999? What happens if my £99,000 grows to being above £100,000? Then falls down to below £99k again?”
david.thorpe@ft.com
