Denmark’s Saxo bank has a history of innovation when it comes to the products and services it offers to its clients. This week Saxo Capital Markets has launched a series of managed portfolios which it calls SaxoSelect.
There are seven funds to choose from and Saxo has collaborated with the likes of Morning Star, Nasdaq and BlackRock in their construction and management. As with rival IG’s Smart Portfolios, Saxo and its partners have created funds that should appeal to a variety of risk appetites with strategies that range from defensive through to aggressive.
Saxo is also offering an ethical fund as well as value, dividend and momentum plays leveraging the idea of smart beta or factor investing
Saxo believes that annual fees will run at around 0.95% per annum full details of the costings of the individual funds are available from the Saxo website. The minimum investment in the defensive, moderate and aggressive portfolios is £10,000 whilst the ethical and dividend factor funds have a threshold of €30,000. The momentum fund has its own minimum investment level of US$ 30,000.
It’s worth remembering that if your base currency is other than those that funds are denominated in then any investment will incur FX risk or exposure. For example, a sterling investor in a US dollar-based fund has an inherent exposure to the GBPUSD exchange rate that can help or hinder their returns.
There are no lock-in periods and investors will be able to monitor the performance of the funds twenty-four hours per day
Much like the IG Smart portfolios the SaxoSelect funds are based on existing products, for example, the Morning Star high dividend fund was established in 2018 and has lifetime returns, net of fees of +16.0%. Whilst the BlackRock managed aggressive fund has a track record dating back to January 2017, since when it has returned +20.0%.
The ethical fund, which will be managed by Brown Advisory, has a one-year track record and returns of +19.0% over that time frame
The introduction of this fund ties in with comments from Saxo’s Chief economist and CIO (Chief Investment Officer) Steen Jakobsen who recently went on record saying that he expects a boom in green equity investing, as both individuals and governments move away from the pursuit of growth and instead come to focus on sustainability and the environment.
Mr Jakobsen said that
“The combination of climate sending a signal of distress – raising the cost of food, water and clean air – with an enormous underinvestment in infrastructure means the market has become complacent and increases the risk of a spike in volatility when the next disaster strikes,”.
By offering these funds to customers Saxo is further diversifying its business away from its traditional CFD and FX trading roots. The market tends to place a premium on the valuation of income generated through funds under management, which is seen as a stable source of revenue, compared to commissions and trading turns. That the market views, rightly or wrongly as being highly variable. Of course, as we noted earlier in the week creating and growing a funds business of sufficient scale to compete with a well-established trading operation is no easy feat. IG has not been able to accomplish this, whether Saxo can remains to be seen but we wish them well in their endeavours.