Multi-Manager - May 2012
Multi-manager funds have for quite a while been suggested as a good way for advisers to outsource their investment decisions - they allow for another fund manager to research the universe of funds, allowing financial advisers to spend more time with clients.
However, some have criticised multi-manager funds for being too expensive - there is a double layer of charges for investors, both from the underlying fund and the manager that selects those funds.
Some wonder whether these funds are worth the money, and therefore the performance of the multi-manager fund comes under close scrutiny, as it has to take account of these extra charges.
Some see multi-manager funds as a starter investment, or for those with a small amount of money to invest. But there are challenges on the horizon for multi-manager funds from other types of investment tool that help outsource some of the decision-making. Model portfolios, risk-rated funds and multi-asset all offer something similar to some aspects of multi-manager funds, and pose an alternative for financial advisers.
Nonetheless, multi-manager funds still provide a large part of the overall sales of retail funds, as registered with the Investment Management Association, and are considered to be a valuable part of any adviser’s toolkit when it comes to advising clients.
As such, despite the challenges looming, multi-manager funds are likely to be around for some time.
Hal Austin is editor of Financial Adviser
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