Chatfeild-Roberts: Multi-manager fees clearer than DFMs

Jupiter’s John Chatfeild-Roberts has defended the fees charged by multi-manager funds, saying they are clearer for clients than those charged by discretionary fund managers (DFMs).

In a video interview with FTAdviser, the manager of the £7bn Jupiter Merlin fund of funds range said multi-manager funds are also superior in terms of performance clarity, as you can’t log onto Financial Express to find out DFM performance.

He said he has managed both types of service - but only multi-manager investors really know what they are getting in terms of price and performance.

Recent Investment Adviser research found that the average total expense ratio (TER) on multi-manager funds was 2.05 per cent, compared with 1.5 per cent for single manager funds. Their fees tend to be higher as investors must pay both for the multi-manager and the fees and expenses in the underlying funds.

Many DFM providers - which are battling with multi-managers to gain control of client assets as advisers outsource their investment duties ahead of the RDR - are now marketing services such as model portfolios as a cheaper alternative.

But Mr Chatfeild-Roberts said: “I would question whether discretionary management services are actually any cheaper than a fund of funds.

“The difference is a fund of funds has to show a TER whereas with a discretionary management service it may not be clear where all the costs are.

“I’ve always believed that the key thing for an investor is to generate good returns after charges and yes we’re perhaps a little bit more expensive than, say, a directly invested fund but actually what we’re trying to do is to generate the best return after charges.”

Click here to view the full exclusive video interview, in which Mr Chatfeild-Roberts also reveals his top investment strategy to beat inflation in the next five years.