Why W1M uses a building-block MPS

Why W1M uses a building-block MPS

By looking beyond the industry-standard 60/40 collection of third-party funds, and instead focusing on direct securities and proprietary strategies, we aim to deliver cost efficiency, full transparency, and greater flexibility in meeting clients’ objectives.

Direct equities and bonds, not outsourcing responsibility via funds

The most significant advantage of our approach is the emphasis on investing directly in equities, bonds and alternatives. Most MPS providers build their portfolios primarily with third-party mutual funds or collectives, which leads to additional layers of fees and a lack of control over the underlying holdings. By contrast, our building-block method enables us to hold securities directly. This not only reduces costs but also provides a much clearer view of exactly what the portfolio owns and what it does not own.

W1M does not charge a separate MPS fee. Our charge is derived solely from the AMC of the building block funds, which is 0.40%. The total cost to client for our Balanced MPS is currently 0.58%.

Transparency

For advisers and their clients, transparency is critical. With direct ownership, we can be explicit about the exposures within the portfolios, ensuring clarity on geographic, sector and style allocations. ESG criteria and considerations are incorporated into our bottom-up research and due diligence and our portfolios tend to score highly from an ESG perspective.  This helps advisers explain the precise risks clients are taking, avoiding the potential issues with fund-of-funds structures. In practice, it means portfolios can be monitored and adjusted with greater precision, supporting informed conversations between advisers and their clients.

Beyond 60/40

The traditional 60% equities / 40% bonds allocation has long been considered the industry benchmark. However, recent years have demonstrated its limitations, particularly during periods when equities and bonds fall in tandem. Our building-block framework allows us to diverge from this conventional model, introducing alternative asset classes to help us pursue more resilient and diversified outcomes.
Another important component of our approach is the ability to incorporate W1M’s proprietary Protection Strategy. This consists of a basket of hedging instruments designed to act “long volatility”. In other words, to provide protection during extreme market dislocations.

Efficient administration

Advisers also benefit from the operational efficiencies the building block approach provides, with straightforward administration on platforms. Portfolios can be rebalanced with ease, ensuring they remain aligned with their mandates and risk profiles, typically with fewer taxable events than fund-of-funds portfolios. With this approach, we can also guarantee the portfolios are consistent across the 28 platforms where our portfolios are accessible. There are no substitute funds or share classes.  For advisers, this can reduce the administrative burden and helps deliver a more seamless client experience.

Conclusion

At W1M, our building-block approach to MPS management is designed to give advisers and their clients more control, greater transparency and stronger diversification. By investing directly in equities and bonds, utilising alternatives, and embedding our proprietary Protection Strategy, we can deliver cost-effective, flexible and transparent solutions. For advisers seeking to differentiate their client offering, this approach represents a robust and modern alternative to traditional fund-based MPS models.