Past performance is not a guide to the future. The value of investments can fall as well as rise.
The Benefits of Multi-Manager
Multi-managed products have grown rapidly in the last few years thanks to a compelling mix of benefits for clients and advisers alike. Before making a commitment to invest however, it is worth weighing up the attractions of the multi-manager option.
Diversification
Diversification is one of the primary attractions of the multi-manager approach. The risk associated with any one manager or fund underperforming is spread across a number of managers, funds and strategies. This means that volatility ratings in the multi-manager sector are often lower than in the wider investment arena that includes single fund arrangements investing in one market or sector.
Fund selection and ongoing monitoring
One of the key attractions of multi-manager funds is that they allow investors to access a range of leading fund managers in a vehicle where manager selection, portfolio construction and fund performance are all monitored by an independent expert in fund manager research. This has led to the products becoming known as ‘sleep at night’ investments.
Access and the ‘best of breed’ approach
Multi-manager investments offer access to leading funds, many of which may currently only be available to institutional or overseas investors. Most significant is the fact that each asset is managed by a specialist manager chosen to manage only the assets they excel at investing in. Multi-manager products allow investors to benefit from specialist managers’ performance in each asset class, without the trouble of having to research and pick all the managers.
Consistency of performance
It is worth noting that the same individual investment funds rarely perform well all of the time, so using only one manager can be something of an all or nothing approach. Different types of manager perform well at different times since various investment styles suit different market conditions.
Summary
Multi-manager funds meet the needs of investors seeking consistency of returns from a diversified arrangement which significantly reduces downside risk. If held for the longer term, this solid, risk-adjusted performance can build into a highly competitive long term investment. What is increasingly clear is that these products can deliver strong and consistent returns for clients while also meeting the needs of advisers ready to outsource an increasingly onerous compliance burden.
Links to other newsletter stories
Help with IHT planning: Part 1
Help with IHT planning: Part 2
Strength in depth in UK equities
• What funds where?
• Past performance summaries
• askTECH
• Adviser News archive
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