10 questions on MPS unitisation

The popularity of the MPS model comes from its perceived simplicity. Wealth or investment managers can select a range of funds to create a portfolio made available to financial advisers and their underlying investors.

However, in practice, this simplicity doesn’t scale well. Distribution of MPS models typically involves multiple intermediary fund platforms—frequently more than 10. In some cases, each updated model or rebalance needs to be loaded manually.

Operationally, this leads to a significant burden, particularly during portfolio rebalances. Reports have suggested some providers spend hundreds of hours each quarter on administration. It’s not just time-consuming; it is a significant operational risk that can materially affect client outcomes.

One alternative is full or partial unitisation of the MPS. Often, MPS portfolios share the same managers across different risk levels. Instead of replicating manager selections across every risk band, you can unitise a component, for example, equities into one MPS building block.

This means using a single ‘fund’ (or unitised structure) containing the chosen managers and allocating to this fund based on the portfolio’s risk level. Unitised allocations could be ‘equities’, ‘bonds’, ‘alternatives’ or a ‘high’ and ‘low’ risk allocation.

You don’t need to unitise everything—if your alternatives allocation is small, for example, you may leave it out. But for heavily weighted asset classes like equities, unitising common components improves efficiency without compromising strategy.

There are several key advantages:

• Operational efficiency: Once managers are aggregated into a unitised fund structure, changes (e.g., replacing a manager or adjusting allocations between managers) are within the fund wrapper, instantly applying to all portfolios, removing the need for individual updates.
• Speed and scalability: You no longer need to wait for clients to rebalance their portfolios; your investment decisions take effect centrally and immediately.
• Flexibility and access: Within a unitised structure, you can include active and passive strategies, overlays, and exclusions. It also opens access to a broader, global range of fund managers or strategies that may not be available on retail platforms in the UK.
• Cost savings: Implementing strategies via segregated mandates is often cheaper than buying funds. This is especially true if providers utilise Russell Investments’ Enhanced Portfolio Implementation (EPI) model.
• Tax advantages:  As MPS portfolios are technically held by investors, rebalancing can create Capital Gains Tax (CGT) liabilities for assets held outside of tax-efficient wrappers such as ISAs or pensions. Changes made within a unitised fund occur without CGT implications.

Absolutely not. The unitised model is about structuring, not manager selection. Your existing manager line-up can remain completely intact.

The most efficient solution is for your selected managers to provide model portfolios that Russell Investments implements in the unitised structure via our EPI approach. We already work with over 130 managers this way. If a strategy isn’t available in model format, we can still include the fund directly within the structure. So, while you can adjust your manager line-up, you don’t have to.

No. Your investment team retains full control over strategy and manager selection, just as they would in a traditional MPS model.

The only thing that changes is the structure through which investments are implemented. Your fund selectors can continue engaging with managers and guiding the investment direction. The process remains open and collaborative, Russell Investments simply supports the delivery.

This approach also opens up additional options, both in terms of a wider variety of managers and a broader range of investment tools, such as overlays and derivatives. You can mix active, passive and factor-based strategies. Whether you’re using high-conviction active managers, index trackers, or smart beta strategies, all can coexist within the fund architecture, tailoring to the investment philosophy, and without sacrificing implementation efficiency.

Yes. A key benefit of MPS is platform distribution, and this remains unchanged. The unitised components are uploaded to platforms just like third-party funds.

Where you previously had 10-15 funds per portfolio, now you might only have one per asset class, simplifying the setup dramatically.

Yes, those can be retained. Your manager will still see that the capital is coming from your firm and apply any existing preferential terms. Additionally, Russell Investments’ scale (over $300 billion in AUM) allows us to negotiate attractive fees with many managers, and we can share those benefits where appropriate. Investing via models can also be more efficient for the managers themselves.

Yes, there is a minimum—though it’s likely lower than you might expect.

A ballpark minimum would be around £100 million in assets. That’s generally sufficient to make launching a fund structure viable.

That said, you don’t need lots of complexity. Some solutions are built around just two building blocks—one higher and one lower risk. Within each block, you can include a full mix of asset classes: equities, bonds, alternatives, passive, active, synthetic strategies.

There is a small trade-off—although it’s more of a shift than a loss.

In a traditional MPS, the burden falls heavily on the distribution side: manual updates across platforms, operational risk, and inefficiency. With a unitised model, you shift the focus to the design and oversight of the pooled vehicle. Someone (like Russell Investments) can run the structure and ensure regulatory compliance and governance.

However, the time and risk saved on the distribution side by adopting a unitised approach far outweighs the input required during fund setup. In our view, it’s a smarter use of resources. And if you partner with a firm like Russell Investments, a lot of the setup burden is outsourced.

Russell Investments brings:

• A heritage in solutions design, with deep experience in creating bespoke, client-led structures.
• Strong industry relationships, encompassing best-of-breed fund managers and distribution platforms.
• A unique capability to implement external manager strategies without imposing in-house views or pre-packaged solutions.

We don’t try to sell a one-size-fits-all fund. Instead, we build the solution you design, using your manager choices, tailored to your clients, delivered efficiently. Our scale also gives us pricing leverage and implementation expertise others can’t match—all with no conflict of interest.

That makes us a uniquely aligned partner. 

Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute investment advice.