Multi-asset – a must-have after RDR?
The multi-asset fund market is crowded, but demand for dominant players will be strong.
Is it essential for fund managers to have a strong range of multi-asset products after the RDR? In the opinion of Ian Trevers, head of distribution at Invesco Perpetual, the UK’s second largest retail fund manager, it is.
The firm has just poached some significant intellectual capital from the team behind the giant Standard Life Investments Global Absolute Return Strategies (Gars) multi-asset fund – in the form of Richard Batty, David Millar and David Jubb. It will also draw on the firm’s established expertise in equities and bonds to contribute to the new offering due sometime next year.
Mr Trevers says any new launches will not be copycat versions of the bestselling Gars fund. Perhaps it is the global rather than absolute return part of the strategy which Invesco will emphasise.
Actively managed funds – including active multi-asset funds – will have to deliver value for money
It also surely won’t be the first shuffling of the fund management deck in the next few years. For now, the various ratings agencies and investment advisers seem divided on whether the loss of this team merits putting the Gars fund on watch or not. The next 12 months or so will present an interesting test of Standard Life Investments’ team-based approach.
It certainly doesn’t require expert reading of the runes to see the potential demand for multi-asset products in the wake of the RDR. Unless they display relevant expertise, advisers will not be able to allocate between multiple asset classes on their own – so they will require external products to do it for them. But does it mean that every fund firm worth their salt should be scouring the market for such expertise?
It may depend partly on the nature of the demand. There will presumably be some interest from retail buyers who are coming to fund managers direct, though they may have sought some guidance or advice from the growing number of sources available. There will probably also be growing demand from advisers seeking a solution combining several fund management skills, from stock picking through to asset allocation and hedging. However, external multi-asset products may not feature in recommendations of firms with a highly centralised investment proposition, or with those advisers who see their role as providing a strategic and tactical asset allocation for their clients.
What we can’t divine yet is how much multi-asset demand will emerge due to changes in regulatory thinking and new rules and how much of it will result from consumers’ increased awareness of the advantages of investing in a diverse range of asset classes and the risks of chasing the latest fund fad. If it comes as a result of a genuine change in investor’s perceptions and attitudes, then surely the money should be stickier – a mouth-watering prospect for any fund manager.