Rathbone is a UK listed company on the FTSE250, and their funds are widely sold in the expat market as well, through platform such as Novia.
This article will review the option. If you have a Rathbone connected policy, or have been proposed one and want a second opinion, you can contact me on the chat function below or via firstname.lastname@example.org
What are the costs?
The costs will partly depend on how you gain access to these funds. If you access them in the expat market, you are likely to pay fees such as:
- Advisor management fees – 1%+ a year
- Commissions – 0%-5%
- Platform fees – 0.2%-1.5% per year
- Rathbone fees – more on that below
Added together, these fees can be substantial and will compound. In terms of Rathbone’s fees, they have a sliding scale.
For accounts above 1.5M the fees are just 0.5% per year. On smaller accounts, the fees are lower, with 1.2% charged on the first 250,000GBP.
What are some examples of Rathbone funds?
The Rathbone Global Opportunities is a great example of one of their options.
This fund seeks options which are off the beaten track in the global market. This has been one of their better performing funds in recent times.
In comparison, their Ethical Bond fund, aims to give investors a steady return, whilst investing in “ethical” projects.
How about some of their recent underperforming funds?
Some of the worse performing funds have been:
- Rathbone UK opportunities – it is no secret that the UK market hasn’t done great compared to their US counterpart in the last decade or two, but this fund hasn’t done much better.
- Rathbone Strategic Bond – This bond also focuses on British Pound investments in the bond market. The weakness in bond returns hasn’t helped this fund.
- Rathbone Total Return Portfolio – this fund has regularly underperformed the sector.
What are the options available to investors in terms of portfolio types?
For expat investors, the options are usually sold together with other platforms.
If you go to Rathbone directly, you can get access to multi-asset portfolio if you have 1,000GBP or more to invest.
If you have 100,000GBP or more to invest, you have additional options at your disposal.
They also offer Discretionary Fund Managers (DFMs) from 500,000GBP.
So alongside lower fees, they have enhanced service levels for larger account holders.
What are the benefits of this option?
The main benefits are:
- This is a “secure” option in the UK. In reality, though most options are now regulated.
- The account minimums are low. This makes this a decent option for beginner investors that can’t get access to cheaper, and better, investment options.
- Some of Rathbone’s funds have done very well recently, such as one of the ethical funds. With that being said, today’s winners can be tomorrow’s losers. Historically, some of Rathbone’s best performing funds, have ended up losing to the market in recent years. So past performance really isn’t an indication of future returns in this case. This is often the case in the investing world.
- Numerous currencies are available, such as GBP, USD and Euros.
What are the drawbacks of this option?
The main drawbacks associated with this option is:
- Sold in conjunction with some of the expensive expat products mentioned in the article at the bottom of this page, this can indirectly become an expensive option.
- Size isn’t always great. It is true to suggest they have assets under management of £40 billion +, but that isn’t always a great sign. Many larger firms see clients as a number and rely on their size. Boutique providers can often give higher net wealth clients more care.
- You are unlikely to beat the market with this option.
- They don’t have a comprehensive high net wealth solution despite the DFM option.
- Your mileage will vary in two ways. Firstly, some of Rathbone’s funds are much better than others. Second, your advisor’s decisions will affect your returns, especially in a mixed portfolio, where Rathbone is just one component. This is especially relevant in the expat market.
- It is highly unlikely, that in a world of open information, that the research team at Rathbone, will be able to continuously pick out great undervalued “global opportunities”
- Many “ethical funds” and bonds, are very subjective. To person A, what is ethical, might be different to person B. So some of these ethical bond funds should be taken with a pinch of salt. Besides, it is usually better not to mix investing with morals. One of the advantages of index funds is that you aren’t taking a moral position. In other words, you are buying the haystack, and not the needle. That haystack might include oil firms on the FTSE100, or big healthcare stocks, but this approach reduces risk compared to investing in a niche area like ethical companies.
- Some of the online reviews from customers is very hit and miss, and indeed the advisory firms that are selling this fund option. That is normal – you can’t make everybody happy all at once. What seems very clear though, is again “your mileage varies”.
- Many of the investment platforms that accept this option, have many restrictions based on clients, living in certain places. In other words, if you live in Switzerland or Dubai, you are likely to be accepted. If you are working in oil & gas, in a far flung location, you are less likely to be accepted.
There are significant differences between investing in this option through a UK provider, and as an expat living overseas.
Rathbone isn’t a bad company but far better options exist, especially in the expat market, for both small and high net worth investors.
They aren’t a terrible option if you have a small percentage of a portfolio in their funds.
The article below reviews some common expat savings and investment plans.
Included in the article is questions from readers at the bottom. A small percentage of the responders have funds such as these, within a larger portfolio.