The digital wealth manager is making its first big move outside of actively managed portfolios with a new, lower-cost range for experienced investors.
Digital wealth manager Moneyfarm is expanding its investment range to include fixed allocation portfolios at five different risk levels.
Up until now, the company has only offered actively managed portfolios, but the new offering will provide a lower-cost option for more experienced investors.
The new portfolios will have both a “classic” and “socially responsible” range, and are designed to provide long-term investment returns with low intervention.
There are no tactical changes to the portfolios, which are only rebalanced once a year unless allocation drifts too far from the models.
As they take less time to manage, the fixed allocation portfolios cost less.
“We constantly look at how we can improve our proposition and service to clients, adding more investment options like the socially responsible ones that we launched last year,” Moneyfarm co-founder and CEO Giovanni Daprà said.
“But one area that we know was missing was the ability to offer fixed asset allocation portfolios.”
Daprà explained that fixed allocation portfolios “aren’t for everyone” because they are only rebalanced once a year.
As a result, they tend to be more suitable for more experienced investors, and those who are more “cost conscious”, who might not see the value of active management.
“We have tested the offer with clients and they are very keen to have this as an option,” he added.
Moneyfarm chief investment officer Richard Flax added that by only rebalancing the portfolios once a year, the company can reduce fund costs, providing “price sensitive” investors with access to a diversified portfolio at an even lower cost.
“At Moneyfarm, we believe in low-cost and globally diversified investment portfolios,” Flax said.
“We have been very successful with our active and socially responsible portfolios, but identified a gap in our product range.
“That is why we have launched a range of fixed-allocation portfolios that offer the same simple and intuitive digital investment experience to clients who are more confident and understand market volatility.”