RDR will boost multi-manager products: Skandia
The retail distribution review will benefit multi-manager funds as more advisers are already recommending such portfolios to their clients, a poll from an investment forum has suggested.
The poll, conducted at the recent Multi-Manager Forums, hosted by Cazenove Capital Management, Henderson Global Investors, Jupiter, Skandia Investment Group and Thames River, found 69 per cent of advisers believed RDR would boost flows into fund of funds and multi-manager products.
The majority - 53 per cent - of advisers who attended the forums, which were held at various venues across the UK, also said they are likely to increase their use of multi-manager funds over the next six months in the run-up to the RDR implementation date of 1 January 2013.
According to Simon Hynes, UK wholesale director for Jupiter, this indicates a significant increase in the build up to the RDR because 84 per cent of respondents are already recommending multi-manager funds to their clients.
One of the main reasons for the increase in popularity of multi-manager funds in the build-up to the RDR is the diversification benefits that multi-manager funds offer, the poll suggested.
The benefits of outsourcing asset allocations to fund managers who are experts in this field was also cited as a key advantage of multi-manager funds.
Mr Hynes added: “The outsourcing and diversification benefits multi-manager funds can offer can help alleviate some of the pressures that advisers are facing so they are able to concentrate on adding further value to their customers.”
When asked whether they would be recommending funds directly, or intending to outsource the asset allocation and fund selection decisions as RDR approaches, 48 per cent of the advisers said that they would be looking to outsource this part of the investment process, with multi-manager funds being the most popular outsourcing route.
The survey responses were from 420 feedback forms completed by delegates from each of the recent June Multi-Manager Forum’s ‘meet the manager’ events.
Meera Patel, senior analyst for Bristol-based Hargreaves Lansdown, said: “We run our own multi-manager fund and do our own analysis on individual funds so we think there is value in both methods.
“Many clients may need a single fund rather than a multi-manager product to suit a particular requirement, while for others it can be best to have a fund of funds approach. Yet with the whole RDR route, the way that charges are broken down will become more complicated and many multi-manager funds may end up having higher charges, so that is something that advisers should consider.”
Drivers for popularity:
Diversification: 65 per cent
Outsourcing: 62 per cent
More on Multi-Manager Funds
- Introducing the JPM Fusion Fund of Funds range
- What to look for when selecting a fund of funds?
- How do multi-managers pick the funds they will invest in?