With the capital gains allowance set to halve to £3,000 next April, much has been made about the future of MPS providers when crystallising client profits.
One investment provider has taken matters into their own hands ahead of the forthcoming legislation change.
Elston Consulting has launched a suite of general investment account model portfolios as an alternative to MPS, aiming to counteract shrinking CGT allowances that will be more swiftly used up during portfolio rebalances.
Each of the five products are curated from Elston’s list of building block fund-of-funds: one apiece in equities, bonds, and alternatives.
According to the firm, this provides a key advantage over a single multi-asset fund as gains can be offset against losses at times when asset class performance dislocates.
Naturally, gains within each Oeic roll up free of CGT, as opposed to encountering potential tax implications within a traditional model portfolio.
“By adding our GIA Portfolios to the suite of solutions advisers can access and adopt, we are aiming to plug the challenge that MPS can create in a GIA context,” said
“There is no one-size-fits all approach, so aligning solutions not only to their target market but also to the tax environment in which they operate is key.”
Indeed, Asset Allocator recently covered that it’s not always a case of MPS versus multi-asset: oftentimes, strategies coexist together.
The most recent NextWealth multi-asset report suggested that most advisers value using a combination of strategies to account for the plurality of client needs – one of which being tax efficiency.
“You can get active management and get trades made in the wrapper while still accessing asset classes and investments you were accessing in the MPS but now you don’t need to worry about CGT,” said one head of financial planning, who asked not to be named.
“You can be intentional about how you use your CGT allowance with multi-asset.”
The report also found that almost half of advisers were blending styles together, which of course widens clients’ investment horizons.
