Octopus Portfolio Manager FAQ’s

Why are you leaving the DFM market?

Since we launched OPM twelve years ago, there has been a huge increase in the number of investment companies launching discretionary management services, with fund managers and technology-led platforms offering efficient access to high-performing funds at lower costs. While we are proud of the returns we have delivered for your clients, we do not believe that OPM is as competitive as other funds available on the market.

As such we are proposing a change which we believe is in the best interests of your clients and will offer them a better outcome than closing the OPM funds. Octopus will receive no financial payment as part of this transaction.  

How will ‘OPM’ change when managed by LGT Group (‘LGT’)?

It will change in two ways. Firstly, the OPM foundation funds will be merged with the Volare Fund Range, managed by LGT. Once your OPM assets have been merged with the corresponding Volare funds, you will hold units in those funds and LGT Group will manage your investments in line with the Volare Fund investment strategy. Secondly, Octopus will no longer provide the OPM discretionary portfolio service to you following the transfer. LGT do offer a discretionary service and we will share details of this with you after the vote on the 23rd February 2022.

What does the merger mean for my OPM portfolio?

The OPM funds will automatically merge with the Volare fund range on 14th April 2022 (‘merger date’) and you will then own units in the Volare funds. From this date, Octopus will cease to be the investment manager of your investment and we will no longer provide the OPM discretionary portfolio management service to you.

From the 14th April to the 28th July 2022, we will continue to hold your Volare funds in our custody, giving you and your financial adviser further time to either complete the paperwork to become a LGTcustomer, transfer your assets to another provider or to liquidate them. We will waive our custody fee during this period.

We wrote to you on the 28th February 2022 to confirm your OPM contract is hereby varied (as per clause 26.2a) to allow us to continue to provide custody and nominee services on your behalf until the 28h July 2022, and that your current OPM contract will terminate on 14th April 2022 (subject as stated regarding our custody and nominee services).

What options are available to me?

How do I become a LGT customer?

You can start the paperwork to become a LGT customer straight away by contacting LGT at [email protected]. LGT will pre-populate your application form and share with you and your financial adviser for completion. Once the paperwork is complete, Octopus will transfer your assets from our custody to LGT’s custody and you will become a LGT customer.

What investment expertise do LGT have?

The Volare Fund Range is currently managed by a dedicated team of six investment professionals who leverage extensively off the larger LGT Infrastructure of over 350 professionals. The biographies of the investment managers can be found in LGT Vestra’s Model Portfolio Service brochure here.

Their objective is to create an “all-weather” investment solution for clients that performs in all markets, by focusing on controlling the downside risk in the portfolios in order to produce an attractive potential rate of investment return over the long term.

The Volare Funds are run to the same target matrix as the Model Portfolio Service (MPS) and mirror the asset allocation and fund selection of the respective MPS portfolio.

This gives you the ability to benefit from MPS expertise and investment process through a single fund solution where you deem this to be most suitable option for you. We recommend you seek financial advice before making any decisions.

Why have you chosen LGT?

LGT is a wealth management firm and banking group, managing £21bn of assets on behalf of their customers. We’ve worked closely with LGT over the last six months and are confident in the quality of their team and investment approach. You can find information about the financial strength of LGT at lgt.com.

How will this affect the performance of my portfolio?

The OPM foundation funds will be merged with the Volare Fund Range which is managed by ‘LGT’. The past performance of the Volare Funds can be found here ,but please note past performance is not an indicator of future results or performance. LGT are an active fund manager, meaning they review their portfolios and the underlying investments regularly, taking necessary steps to ensure these will deliver long-term, risk-adjusted returns. 

What experience do LGT have in managing similar propositions?

The Volare Fund Range was launched in 2017, and these funds have grown to over £250m and the strategy holds over £7bn. More information about LGT Vestra and the Volare Fund range may be found on here.

What level of reporting do LGT provide and what access to investment professionals will they provide?

LGT Vestra clients can access fund valuations 24/7 using an online portal. Additionally, investors will receive quarterly valuations with fund market commentary.

The Volare Fund Range is currently managed by a dedicated team of six investment professionals who leverage extensively off the larger LGT Infrastructure of over 350 professionals. The biographies of the investment managers can be found in LGT Vestra’s Model Portfolio Service brochure here.

Will I be able to view my real-time investments online with Vestra or will I be getting the monthly valuations from Octopus still?

Octopus will continue to provide valuations on the OPM funds until 13th April 2022. From the 14th April to 28th July 2022, Octopus will provide reporting on the Volare funds and share this with you in the same way we do today. From 13th April, we will be unable to provide a full ‘look-through’ valuations per OPM fund as we do today. This is because the OPM funds are being merged with the Volare funds.

What asset allocation methodology does the firm use?

The volatility bands, asset class, geographical composition, and investment objectives of the Volare funds are broadly aligned with the current OPM funds. The FCA and the fund’s Authorised Corporate Director have both approved the compatibility of the OPM and Vestra funds on this basis. Similarly, Vestra will not change the current underlying holdings within he OPM funds before the transfer.

LGT uses a multi-asset approach designed to provide diversification and applies both quantitative & qualitative analysis to determine how best to allocate sectors, geographically and at different levels of the capital structure. They have their own in-house economists and specialists as well as purchasing external research to ensure that the right information is available ensuring the best chance of making the right decisions.

The Octopus foundation funds have been mapped to the Volare Fund Range as follows.

How strong are the firm’s research capabilities?

LGT have their own internal investment research team which is solely responsible for fund research and due diligence. On top of this the investment team conduct regular reviews of all underlying Volare Fund investments including fund manager assessments.

 Will there be a difference in fees following the merger?

Set out in the table below is the current Ongoing Charges Figure (“OCF”) of each share class of the OPM foundation funds and their respective Volare Fund. Your holdings with Octopus are in the C shares. Any OPM holdings you may have on third-party platform are in the B shares. In addition to the below OPM fund OCFs, Octopus currently charge a headline annual discretionary portfolio management fee of 0.78% incl VAT for investment profiles 3-10. The current OPM fees and charges document can be found here.

While the Ongoing Charges Figure (“OCF”) of the Volare funds is higher than the OPM funds, they do not attract a discretionary management fee, and includes LGT’s Annual Management Charge of 0.35%. LGT charge a 0.25% custody fee. We appreciate the charges being applied will vary from client to client, Vestra will be in touch with your financial adviser to discuss this further in the coming days. If you don’t have a financial adviser, please contact us at [email protected]

What do I need to do if I want another provider to manage my investment?

Please contact [email protected] to let us know which OPM portfolio(s) you’d like to transfer, and we’ll be in touch to arrange this. If you’d like to transfer your portfolio before the merger takes place, please send us your instructions no later than 31st March 2022. Please seek advice from a financial adviser before transferring your OPM holdings to ensure your new investment manager can accept in-specie transfers and to avoid potential disruption to your ISA and / or capital gains liability.

<strong>Can I partially withdraw my holdings?</strong>

Given the cessation of Octopus as your DFM provider and the imminent closure of OPM on 28th July we expect investors to instruct us to act in relation to their entire holding amount, rather than a partial amount. Partial withdrawals of your holdings will require a specific instruction from you of the funds and amount of units that you wish to sell down. In addition, any partial withdrawals from your holding will likely disrupt your investment profile that you selected when becoming an OPM investor. Speak to your financial adviser or contact us directly at [email protected] if you have further questions. Please remember that any holdings you continue to hold after 28th July may be liquidated or transferred in your name.