Your IndustryAug 15 2013

Does the multi-manager shoe fit?

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Before an adviser makes a recommendation, they should arrange a detailed investigative discussion with the client to understand their investment requirements, risk appetite and capacity for loss.

Cedric Bucher, head of business development of Architas, suggests this should be supplemented at least annually with further meetings to assess any changes in circumstance that may cause you to re-assess whether a chosen fund or strategy is suitable.

“Many multi-managers offer risk-profiled solutions, designed for specific risk appetites and investment profiles, to make selecting an appropriate fund easier.”

It is the multi-manager’s responsibility to ensure the fund performs in line with its objectives and remains within any risk-profiling framework. However, it is ultimately the IFA’s responsibility to ensure that the fund remains suitable for their client.

Thorough due diligence should include looking at the funds underlying holdings in terms regional or sector bias and allocation; the manager’s style of investing and track record; and the total cost of investing in the fund, according to Rob Burdett, co-head of multi-manager at F&C Investments.

“While past performance of the fund should be looked at, it is important to note that this is not a determinant of future performance.”

Graham Duce, co-head of multi-manager funds of Aberdeen Asset Management, says: “Multi-Manager funds are run within strict investment objective parameters which will often broadly meet any given client’s risk profile.

“However, the pooled fund structure means that individual preferences will not be catered for on a bespoke basis and the adviser ‘owns’ the relationship with the underlying client.”