Elston Consulting has launched a direct gilts research service for financial advisers looking to make individual gilts recommendations.

Alongside this, the firm introduced a direct gilts managed portfolio service (MPS) solution from Elston Portfolio Management, which is available through Transact.

The research service will seek to help enable advisers to analyse key characteristics of near-term gilts based on their yield, coupon, and maturity.

While advisers must have the relevant qualifications to recommend individual securities, they can alternatively access discretionary managed MPS.

To meet this potential demand, Elston launched a direct gilts MPS solution on Transact, with a management fee of 0.05 per cent.

Elston Consulting argued that selective near-term direct gilts were a “smarter alternative” to cash deposits or money market funds for higher and additional rate taxpayers.

It said that this was because a significant portion of their yield came from tax-exempt capital gains rather than taxable coupon payments.

This resulted in after-tax yields being “considerably higher” for direct gilts than for cash deposits and money market funds.

The exemption is only valid for directly held gilts, not for gilts held in funds, ETFs or money market funds.

“For higher rate taxpayers, near-term direct gilts might be a better, more tax-efficient, alternative to shopping around for deposit rates, or indeed money market funds,” commented Elston Consulting head of research, Henry Cobbe.

“We want to give advisers the tools they need to offer this service themselves. They can do this with our help on an advisory basis or via the new platform-based MPS.

“Either way there is no longer a need to refer direct gilts clients away to higher cost direct discretionary managers who structurally compete with advisers in the financial planning space.”

Transact deputy CEO, Tom Dunbar, added: “We have seen growing interest in advisers accessing direct gilts via our platform both on an advisory basis and via MPS.

“As a manager-agnostic platform for advisers we welcome continued innovation in the pursuit of delivering good client outcomes.”

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