PortfolioMetrix has launched a short-term gilt model portfolio to offer investors a “stable option” amid market volatility.
The new portfolio is made up of UK government bonds that mature within the next five years with a strong bias towards those maturing within the next two years, the firm said. It is aimed at advised clients who have large cash positions and is designed to act as a shorter-term savings product and alternative to bank cash deposits.
In line with its goals to be as tax efficient as possible, gilts will be carefully chosen to maximise expected capital gains and minimise income, the firm said. This means that if it is held within a general investment account, the model can be more tax efficient than cash deposits in the bank. It will select gilts that have low coupons and trade at a greater discount to their maturity value/issue price to prioritise capital gains.
The new portfolio will cost a discretionary fee of 0.25%.
Nic Spicer, UK head of investment at PortfolioMetrix, said: “We wanted to offer financial advisers a simple way to access these cash-like returns for clients while keeping their investments together in one place for financial planning purposes.
“Given the tumultuous market conditions, the consistent and tax-efficient returns of this model offer an attractive, stable option for advised clients.”
PortfolioMetrix UK managing director Ben Peele added: “This model is another example of the ways we’re trying to make advisers and their clients’ lives easier. For those clients who have investment outside of traditional tax wrappers, this model should help meet a growing need in this tough economic environment.”
