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UBS Adds Third-Party Model Portfolios to No-Manager-Fee SMA Offering

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What You Need to Know

  • BlackRock, Capital Group and JPMorgan are among the asset managers providing model portfolios as part of the expanded offering.
  • In June 2020, UBS expanded its zero-manager-fee offering to include third-party strategies.
  • Capital Group, parent of American Funds and a partner with UBS on the initiative, says models have become one of its fastest-growing businesses.

UBS Wealth Management USA has expanded its offering of zero-fee separately managed accounts (SMAs) with model portfolios developed by BlackRock, Capital Group, Dimensional Fund Advisors, JPMorgan, Natixis Investment Managers and Nuveen.

As of Wednesday, UBS clients now have access to eight model portfolio suites in the offering, which has no additional investment manager fee. (The underlying funds have their own fees.)

Each model portfolio was “carefully constructed” by its manager to address a variety of objectives and enable UBS financial advisors to effectively address a broader number of client needs, the firm said.

The zero-fee move by UBS comes about a week after Morgan Stanley’s Managed Advisory Portfolio Solutions business added model portfolios from BlackRock, Goldman Sachs and JPMorgan to its Select UMA platform. This expansion includes three exchange-traded fund model suites with no sub-management fees, which can be tailored to clients with different risk tolerances at a $25,000 minimum, the wirehouse said.

Earlier Steps Taken by UBS

In January 2020, UBS launched its zero-manager-fee pricing structure for strategies available from UBS Asset Management, becoming the first firm to provide clients with access to select SMAs with no additional manager fee, it said.

In June, UBS expanded the offering to include third-party asset manager strategies with no additional fees. Certain strategies, such as those that include sustainable investing or personalized tax management, can be selected for a fee.

All of its SMA strategies are available through WM USA’s ACCESS platform, with Vestmark Advisory Solutions serving as the discretionary overlay manager for model implementation. This is a “turnkey solution that connects UBS advisors with a wide array of SMA strategies from some of the world’s top asset managers,” according to John Lunny, Vestmark CEO.

The expanded offering increases investor choice and provides “greater differentiation to meet our clients’ unique needs, outcomes and investment objectives,” Jason Chandler, head of UBS Wealth Management USA, said in the announcement.

“At the same time, we’re giving our advisors a competitive advantage by adding strategies that complement our offering in a pricing structure our clients love,” Chandler added.

Capital Group, which offers investors the popular American Funds, is continuing to grow its model-portfolio business, according to Pete Thatch, a senior vice president and director of national accounts. Noting that “UBS is an important partner” for Capital on the initiative, he said: “Our aim is to provide investors with a more consistent long-term experience including excess returns with less volatility.”

Models have become a “priority for us and one of our fastest-growing businesses with $58 billion in total assets currently across all partner platforms,” Thatch said. “Advisors have a lot of demands on their time. Our models give them access to our superior, long-term investment results while freeing up their time to do the things where they most add value — understanding their client’s needs and goals, and creating investment plans to achieve them rather than building and monitoring portfolios.”

As advisors “look for new ways to differentiate their value-add to clients, improve investment outcomes and efficiently scale their businesses, they are increasingly turning to model portfolios, according to Ted Dimig, head of advisory and core beta solutions at JPMorgan.

(Photo: Shutterstock)