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Friday, December 1, 2006
Sanlam explains

Linked Investment Service Providers (LISPs) are companies that provide an administration service to investors with generally more than R100 000 to invest. Most LISPs also decline to accept single investments of less than R50 000. LISPs are essentially wholesalers of unit trusts and other investment products, and allow the investor to spread his risk across more than one asset manager from a consolidated platform.

Says Sanlam, they offer investment solutions that are linked to an underlying portfolio. They usually have a wide range of collective investments available on their platforms, managed by asset management companies. Sometimes they also offer other types of investments such as shares, fixed interest instruments and their own funds and products.
One of the most significant benefits of a LISP, says Sanlam, is that investors can create their own personalised portfolios. After selecting a solution to match their financial requirements, clients then choose the underlying investments - typically collective investments - and products that together best match their risk profile, and which can potentially help them to reach their objective.
After having made their initial investment, clients can easily switch between funds as required to keep up with changes in the market climate or investors’ requirements or circumstances. Switches done through a LISP reduce administrative inconvenience significantly.
For investors who prefer not to choose their own range of collective investments, make investment decisions or keep track of the markets, LISPs may also offer their own range of risk-profiled managed solutions on their platform, including multi-managed funds and wrap funds. Generally, these are compiled and managed by experienced portfolio managers and offer diversification across assets, sectors, regions, funds and fund managers.
As the underlying investments in the portfolios are generally collective investments, investors benefit by the liquidity of these products. Collective investments are priced daily and are easily repurchased or switched. The investment value can thus be seen on a daily basis.
LISPs are also fairly transparent with regard to fees and offer a wide range of investment options.
Note that unit trust investors who sell a fund and reinvest the proceeds in a fund with a different unit trust management company will generally pay the initial fee of around 5% each time they switch.
 

Copyright © Insurance Times and Investments® Vol:19.6 1st December, 2006
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