Drummond to expand private market SMA to retail
Investment manager Drummond Capital Partners is to launch a retail version of its private market separately managed account (SMA) next month.
The Drummond Private Market SMA was launched last May as an active semi-liquid managed account investing in private markets, originally for wholesale investors with a minimum investment of $100,000, and developed in association with Ironbark Asset Management.
Following its successful launch and take-up, Drummond is now expanding into offering a retail version.
Speaking to Money Management, Caitriona Wortley, head of strategic growth at Drummond, said the decision to launch a retail version had been prompted by the high volume of advisers who class their clients as retail investors.
Presenting clients as a retail investor entitles them to greater protection in the event of a product failure, while wholesale investors are required to pass an eligibility test based on their assets and investment knowledge.
Wortley said: “We are well-known for our solutions in private markets and had the first private market SMA in the market about a year ago, so we have a niche there.
“The uptake of the private SMA has been pretty huge. The current offering we have is wholesale, but we will be launching a retail version SMA in September, and that’s a stepchange for us.
“A lot of advisers will treat clients as retail, even high net worth ones, and so the ability to offer a retail structure is really important, and that’s been a big focus of our lot of conversations with advisers.”
The product sits as an SMA outside of its managed accounts, which can be blended into the portfolio depending on client needs and objectives, with Wortley estimating advisers typically use a 10–15 per cent allocation.
Over three-quarters of the portfolio has daily or monthly liquidity, with most investments held in private debt or private equity.
“You don’t want it in the managed account as it isn’t suitable for every client, as it is less liquid, so you don’t want it alongside all the daily liquidity ones. It should be an adviser-client conversation as to whether it is suitable for them.”
Last month, the firm announced a refocus of its business model to help financial advisers scale their business with a dedicated practice growth division. This includes help with succession planning, pricing and profitability, retirement advice, technology, and growing their value proposition.
It also launched both a tailored portfolio solution division and a passive model portfolio suite for practices serving mass-market clients which will comprise low-cost ETFs with a total cost to client of 38 bps for the growth option.
AUTHOR
Laura Dew
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