Distinction Asset Management offers IFAs equity stake

Distinction Asset Management is being launched with £184 million in a range of multi-asset class and single asset class funds. The firm is introducing an innovative ownership structure to the UK fund management industry by offering IFAs the opportunity to gain an equity stake in the business in return for introducing their clients’ assets.

Distinction has been created by combining the assets, skills and resources of three companies. The Fry Group established in 1898 have pledged the assets under management and funds they established in Ireland; Harrington Cooper have provided the investment management company and distribution knowledge; and Armstrong Investment Managers are providing the investment management skills to manage the multi-asset class funds at the core of Distinction’s fund range.

Distinction will also offer two critical differences to other managers:

1. First, 65% of the equity in the business is available to the advisers who commit their clients’ assets to the funds. The value of each adviser’s equity (delivered by a right to options in the company) will be determined by the assets introduced and the longevity of the investment. With more than £180 million already managed by the new business this equity will already have significant value potential.

2. The establishment of both a UK and international advisory panel to allow advisers the opportunity to review managers, select new investment funds and also advise on which platforms the funds are available.

Distinction will also pay renewal commissions and front end fees in line with industry norms.

Patrick Cooper, managing partner at Harrington Cooper, says: “We understand the important role advisers play in growing a fund management business. That is why we decided to set up Distinction in a way that will encourage and then reward IFAs for their efforts. We are offering intermediaries a compelling investment opportunity that allows them to share in our success as we grow the business. Recent announcements about investment management company flotations and the amounts their employees will share show the significant wealth created by advisers that is passed on to investment managers. We are seeking to realign this.”

Armstrong Investment Managers (AIM) has already been selected to manage the Dynamic Funds that will be at the heart of the Distinction range. Armstrong will re-brand their existing UK fund to Distinction and will exclusively manage UK retail assets under the Distinction banner. The fund managers at AIM have worked together previously as a team and have a long and strong track record.

Stephen Tucker, managing director at The Fry Group, says: “We have committed our clients’ assets to fund managers over many, many years. Each time we have seen these investment managers walk away with significant corporate and personal wealth. We have now created in Distinction a structure that allows us and other advisers a real opportunity to share in its value. Distinction will give us the building blocks of an asset from which we can move forward and invest in our business and most importantly our clients. They will benefit from the investment management skills and experience of the team at AIM.”

Dr Ana Armstrong, joint managing partner of AIM, says: “We established our business to focus on global macro multi-asset investment solutions and our priority is to deliver market leading, risk-adjusted, inflation-beating returns for our clients. Our funds start with a clearly defined budget for each fund and then we maximise returns for that level of risk by efficiently allocating capital across a broad opportunity set made up of varied regions, asset classes and types of investment vehicles.”

More information is available at distinctionfunds.co.uk.