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Investors in multi-manager

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Guide to Multi-Asset vs Multi-Manager

A diversified multi-manager fund can also be used as a core holding within a broader portfolio, says Francis Ghiloni, director of distribution and client management at Scottish Widows Investment Partnership.

For investors wanting the potential for high returns, Mr Ghiloni says higher risk satellite funds can be added to the “core” holding of a multi-manager fund.

He says: “The combination of a widely diversified portfolio that focuses on reducing volatility with funds aiming for higher returns from specialist equities can increase the overall risk/return profile in a prudent way.”

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Multi-manager is more for somebody who does not want to do the work of fund selection themselves and wants to appoint somebody to do it, according to Adrian Lowcock, senior investment manager of Bristol-based Hargreaves Lansdown.

Mr Lowcock says: “Multi-manager is basically taking the role of you as an individual and saying, this is how I am going to construct my portfolio. Picking a good multi-manager is therefore very important.

“You could use multi-manager as a core to build other holdings on. Multi-asset could be added as a diversifier.”

Multi-manager will be suitable for the same broad range of investors that would buy any multi-asset fund or fund-of-funds, according to Paul Rutland, investment business development manager of Prudential.

He says: “Such investors will also value the further diversification associated with having assets invested across a range of asset classes and fund management groups.”

Peter Fitzgerald, head of multi-asset retail funds at Aviva Investors, says multi-manager funds offer a viable alternative to many of the discretionary fund managers (DFM) offerings, many of which he claimed are simply an unbundled fund of funds.

Mr Fitzgerald says: “In my opinion, it is not possible to offer a customised discretionary portfolio management service to private clients for less than £500,000 in a cost effective manner.

“The multi-manager funds combine active asset allocation with unfettered third party active managers.

“Their charging is transparent, the performance can easily be compared to others in the market and crucially the IFA remains in control of the client relationship.”