Evelyn Partners launches Cash & Cautious Bond strategy into the financial adviser market

Evelyn Partners announces today the launch of its Cash & Cautious Bond strategy into the financial adviser market. 

This active discretionary portfolio management service invests in a bespoke and fully flexible selection of liquid, high-quality and low-risk cash-adjacent securities and shorter-dated bonds with the aim of beating the returns available on cash accounts.  

Bespoke Cash & Cautious Bond portfolios, which were first made available to Evelyn Partners’ direct clients two years ago, offer greater diversification than many existing near-cash strategies and gilt ladder services on the market, incorporating not only cash deposits, money market instruments and gilts, but also bonds issued by selected global organisations with strong credit ratings.  

The portfolios can be tailored to individual clients’ timescales and drawdown needs, while also offering the potential for tax-efficient returns. The strategy is being made available to the adviser market at a competitively priced ongoing fee of 0.15% pa covering both portfolio management and custody [see summary of key features below for further detail].  

All assets are held in nominee accounts. Managing cash deposits can be complex and time consuming, requiring continuous monitoring and research. Investing in the Cash & Cautious Bond Portfolio is an alternative option. 

Making this established and distinctive low-risk strategy available to advisers forms part of the firm’s strategic focus on growing its presence as a leading solutions provider for financial advisers and supporting them in navigating their clients through a period of global uncertainty. 

Matthew Spencer, Head of Intermediaries at Evelyn Partners, says: “Our Cash & Cautious Bond strategy has been a widely welcomed solution over the last couple of years for direct clients of Evelyn Partners looking for a home for substantial cash balances. Savings accounts are already seeing reduced returns, and with central banks expected to continue to cut benchmark rates, as we saw last week with the latest reduction by the Bank of England, this is set to continue.  

“There’s a window of opportunity for financial advisers to lock in elevated short-term bond yields for their clients as part of a diversified and low-risk strategy.  

“Current global economic uncertainty and volatile equity markets mean many clients are also looking for somewhere to earn an enhanced return compared to cash, while they wait until the macroeconomic outlook becomes clearer before putting money to work in riskier assets. Cash accounts can also leave clients exposed to tax on interest, with additional rate taxpayers having no personal savings allowance and higher rate taxpayers only able to receive £500 of interest tax free each year. The Cash & Cautious Bond service can provide an element of tax-efficiency through the inclusion of bonds that are exempt from capital gains tax. 

“We feel our Cash & Cautious Bond strategy offers a more sophisticated solution to addressing the headwinds for savings rates than any other comparable service on the market - such as cash management services and gilt ladders - as it uses a more diverse and flexible range of instruments, with the potential for enhanced returns. These portfolios invest in very high-quality and liquid investments with no currency risk, and the strategy is provided via financial advisers at a competitive price of 0.15% p.a. for portfolio management and custody.” 

As with all investing, and unlike bank accounts, there is an element of risk and you may not get back the amount you put in.

Key features of the Cash & Cautious Bond service:

• Portfolio investments: Rigorous Evelyn Partners investment research process encompasses a broader selection of instruments than many competitors’ offerings: sterling cash, approved Money Market funds, UK Treasury-bills, conventional gilts and approved Supranational, Sub-Agency and Agency (SSA) bonds*. All bonds will have a maturity of no more than five years at the time of purchase. 
   
• Flexibility: There is no upper limit to how much can be invested in each portfolio and top-ups can be made at any time. Underlying investments are highly liquid so investors can sell quickly if needed. Maturity profiles can be tailored to meet specific target-date needs or preferences within the permitted range of underlying investments. Investment managers have the flexibility to choose investments from a ‘permitted list’ which have been researched and screened to be eligible for use in these portfolios.  
  
  
• Tax efficiency: Cash & Cautious Bond portfolios can be structured in a way that can help mitigate an investors tax liability by investing in UK gilts and other qualifying investments that are exempt from capital gains tax for individuals and charities but not companies.  

• Custody arrangements: Cash & Cautious Bond portfolios are held on Evelyn Partners’ custody platform.   
   
• Risk rating: Evelyn Partners Strategy 1 (out of7) 
  
  
• Pricing: for clients of financial advisers the service has an annual management fee of 0.15%, comprised of a 10-bps custody fee and 5-bps investment management fee (the IM fee component is subject to VAT, the custody fee is not). This competitive price has been kept low by the absence of commissions or transaction charges. Additionally, Evelyn Partners invest directly in individual instruments where possible, which keeps costs low by avoiding the charges of third-party funds. 
  
  
• Suggested subscription level: Best from £500,000 upwards  

Ian Kenny, Investment Management Partner and Head of Fixed Income, added: “Interest rates and bond yields have been on quite a journey, moving from all-time lows to decade highs over the last few years, and that has fundamentally changed the landscape for savers and asset allocators at the short end. 

“Now is a great time to be having conversations about cash or near-cash to make sure that cash balances are well-mapped to need and preference and are working as hard as they can be.

“The disciplined Cash & Cautious Bond framework allows us to build bespoke portfolios to suit each client’s needs and preferences but within a structure that is mindful of and limits interest rate, credit and liquidity risks. We can optimise the shape and balance of each portfolio by considering, among other factors: likely need for ongoing current near-term liquidity, target-date or liability-matching objectives, high or low coupon preferences and appetite for extending into market yields beyond the immediate term. 

“With a further rate cut from the Bank of England last week, the path for Bank Rate is more likely to be flat and falling than rising, making now a suitable time to make sure that cash is working as hard, and is as well tailored to needs, as it should be.”

To arrange a media interview with Ian Kenny, please email mediaenquiries@evelyn.com 

*SSAs: This class of bonds falls within a distinct fixed income category. The issuers of these bonds are typically multinational organisations or government agencies, which have similar risk profiles to governments. Examples include the World Bank’s lending arm, the International Bank for Reconstruction and Development (IBRD), and Germany’s development bank, Kreditanstalt für Wiederaufbau (KfW). Only a limited set of issuers are chosen for the Cash and Cautious Bond Portfolio. 

ENDS