Matt Heine
Independent wrap provider Netwealth Investments is to launch an Investor Rewards Program on October 1, described as an alternative to the traditional baby wraps on the market.
A subset of Netwealth’s existing 280-fund Investment Wrap and Super Wrap menu, the Investor Rewards Program will comprise 40 to 50 funds, with each fund having exclusive access to their sector or style.
It will contain flagship offerings from the main fund managers as well as a “good presence” of boutiques, accessible at a lower cost to investors through its rebate structure.
As an inducement to advisers to use the Investor Rewards Program menu, there will be an investor reward rebate of up to 10 basis points, payable direct to the investor, thereby reducing the overall cost of investment.
Netwealth will invoice fund managers for the rebate, which will then be paid directly into an investor’s account every six months, calculated on a daily basis.
As a further inducement, the baby wrap will offer a choice of five research driven model portfolios, using Netwealth’s multi-manager funds as their core as well as a range of satellite options from the cut-down menu.
Netwealth is expected to appoint a research consultant this week to construct the model portfolio within the next few days.
Director of distribution and marketing Matt Heine expects the Investor Rewards Program to receive about 80 per cent of inflows from its 65 dealer groups and 350 advisers, with the other 20 per cent going to the other managers on the broader menu.
“Notwithstanding the current state of the market, we anticipate at least another $400 million into these various Investor Rewards Program options over the next 12 months.”
Heine said the structure of the program is “based on feedback from advisers and investors that use baby wraps that they want more investment options”.
“This includes the ability to invest in shares and alternative assets such as hedge funds and illiquid investments.
“That goes against everything a standard baby wrap on the market can provide,” he added, “but we have been able to offer these options by structuring our Investor Rewards Program to sit within the broader menu.
“The program does not have a complex mandate structure, allowing advisers to both reduce the cost of investment for an investor and to choose from a wider range of investments.”
