Omnis, the asset management business that runs money for advisers within the Openwork network, has reached £11bn of assets under management.
Andrew Summers, chief investment officer of the business, told FT Adviser the company’s long-established OMPS range has assets of £6bn, all of which is run by third party managers within segregated mandates.
This range tends to focus on a strategic asset allocation, within the traditional 60/40 parameters.
A further £2.8bn is held within the Omnis Agility range and this is the product where most new client capital is placed.
It has more of a focus on tactical asset allocation than the OMPS range. The allocations are more likely to change based on shorter-term market events.
The other major difference between this and the other portfolio is that up to 30 per cent of the Agility range is invested in exchange traded funds (ETFs).
Summers said: “At the moment we have a healthcare ETF, and ETF invested in index linked bonds and one invested in long-dated government bonds.
“The advantage of owning ETFs is that they allow us to express a precise view.
“We are conscious that many thematic ETFs come to market at the wrong time, when there is a fad associated with a particular asset, though no one could say that a healthcare ETF is a particularly fashionable trade right now.
“What we do, to help us avoid chasing fads, is we give a score to every ETF on the market – the scores help us to generate ideas.”
Fixed income
A challenge faced by many investors has been fixed income allocations, which have been historically owned to provide diversification away from equity risk, proved to be correlated equities in 2022.
Summers said: “The combination of events of 2022 were a once in a hundred year event, but when it happens there really isn’t anywhere to hide.
“A lot of investors owned alternative assets in the years prior to 2022, particularly alternative income assets, and it turned out those were just correlated to bond yields, so when they rose, the value of those alternative assets fell.
“With some of the portfolios around 15 per cent is in alternative assets, with 10 per cent of that coming from bond allocation and 5 per cent from equity allocation.
“What we are looking for is absolute alpha, that is the holy grail but very hard to find because it’s not really based on correlations.”
The alternatives fund Omnis holds is one run by Fulcrum Asset Management, which Summers said performed well in 2022 when markets generally fell.
Summers also said the use of segregated mandates, a bespoke fund created for one client, is becoming more common.
He feels this is because, as asset managers are faced with outflows, they have become more willing to create such funds, and may now do so for £100mn “whereas in the past the minimum asset size required would have been much higher for most firms”.
The remainder of the assets are held within the Graphene, an advisory model portfolio service that invests in Omnis funds but has no tactical asset allocation and which uses periodic rebalancing.
david.thorpe@ft.com