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REVIEW SUMMARY

Rathbone Investment Management

Rathbone Brothers Plc is a UK headquartered provider of personalised investment management and wealth management services for private investors and trustees.

This includes discretionary investment management, unit trusts, tax planning, trust and company management, pension advice and banking services.

Rathbone Brothers Plc is an independent FTSE 250 company.
Overview
FAQ
Customer Reviews
Expert Verdict

The business was founded by William Rathbone II in 1742 as a Liverpool-based timber trading business.

In the 19th century it became a leading trader in cotton from the United States, and in 1841 it became the Liverpool agent for the East India Company.

In 1912, it abandoned its trading operations and focused on financial management, initially for the Rathbone family, in a way an early form of the family office, but subsequently for the general public.

In 1988 it merged with Comprehensive Financial Services Ltd to form Rathbone Brothers, and thereby secured a listing on the London Stock Exchange.

Rathbone Investment Management provides investment management, financial planning, tax and trust services.

Rathbones has funds under management of nearly £36 billion.

Based out of Jersey, Rathbone International is the offshore arm of the firm, and provides investment management services for international financial advisers and intermediaries.

Rathbone unit trust management, is an active fund management firm offering investors a range of equity and bond funds. Each of these funds have a selection of ‘sub funds’ or ‘share class options’, which are essentially the same fund but as they can have different fees and charges the growth they achieve can vary. 

 

The Pros

> Strong brand
> Traditional approach to beating markets
> Secure

The Cons

> Expensive way to invest
> Active methodology is academically questionable
> Pays retrocession commission to your adviser which can create conflict
What is Rathbone's basic offering?

From what we understand, Rathbone offers three choices to clients and their advisers:

  • A multi-asset portfolio service for those with £1,000+ to invest.

This comprises of three UCITS IV funds in the range, which are available in GBP, EUR and USD (EUR and USD share classes are hedged).

  • A unitised portfolio service for those with £100,000+ to invest.

Comprising of six strategies in the range, which invest in the Rathbone multi-asset portfolios.

  • An individual portfolio (DFM) for those with £500,000+ to invest.

For those with sufficient funds, who require a tailored approach to their investment.

Does Rathbone offer Discretionary Fund Management (DFM)?

Rathbone claims that their investment process is designed to meet each client’s individual requirements, and that their investment managers have the freedom to find the best options for each client’s goals, selecting from an unrestricted choice of investments.

Rathbone also state that this “includes asset classes, funds and other structures that may not be open to all investors”.

For us, this rings alarm bells, because freedom to go off-piste, whilst exciting, is inherently more dangerous and risky.

As for asset classes, funds and structures that “may not be open to all investors,” we worry about liquidity and the ease of selling such investments.

Rathbone go on to state that “not all firms give their managers this flexibility” – we believe there is a good reason for this! 

What are Rathbone's fees and charges?

Rathbone Investment Management International has a range of services and fee structures, partly influenced by the level of assets that a financial intermediary has lodged with them, however we have set out below an example of a basic charging structure.

Please note that these are Rathbone’s fees, your adviser will charge you between 1% to 1.5% in addition to this, and if your assets are held within a wrapper, there will be additional wrapper fees, possibly in excess of 1% per annum to pay.

Management fees : Per annum

First £250,000 : 1.2%

Next £500,000 : 1.0%

Next £750,000 : 0.75%

Balance of £1,500,000 : 0.5%

(An introductory fee payment to your financial intermediary of up to 3% may also be charged).

How have Rathbone's funds performed in recent times?

A recent review by UKMoneySite looked at 29 of Rathbone's main unit funds and their associated share classes. They analysed them for performance alongside all other competing same sector funds over the 1, 3 & 5 year periods up to 23rd November 2016.

Each fund was rated as ‘Top’, ‘Mediocre’ or ‘Poor’ based on how they consistently performed during this period.

None of the Rathbone's funds analysed had been able to maintain consistent ‘Top’ performance. In fact, 25 of the 29 funds reviewed were rated as ‘Poor’ as they ranked in the bottom 50% of funds in their sector for performance during the periods analysed.

The analysis highlights both a lack of consistency and poor performance from Rathbone’s funds.

Despite a proportion of their funds achieving comparatively high levels of growth over 5 years, they have struggled with declining performance, their Ethical bond fund is one such example. This fund had delivered competitive returns over a 5 year period and ranked in the TOP 25% of funds in its sector, but steadily this fund has declined and over the most recent 12 months it has ranked in the lowest 25% of funds in its sector for growth.

Inconsistent performance

I know markets go up down and sideways, but seeing as they've been doing pretty well of late, I'm disappointed about the lack of consistent positive performance enjoyed with Rathbone. So, I've switched away from them recently - have yet to see how much better my investments fare...but they can't do much worse surely.

Expert Assessment of Rathbone Investment Management

Whilst Rathbone is a respected name and they provide a range of international actively managed DFM solutions, we believe that there are better and more cost-effective alternatives. 

If you already have a Discretionary Managed Portfolio with Rathbone, and it is worth £50,000 or more, we recommend you get a X-Ray Review™ conducted to give you the information you need to make a decision on the best way forward.

 

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