Some of the long-established multi-managers have in many ways become part of the investment furniture. They quietly and professionally go about their job, within clearly defined risk buckets, without the associated noise and ego of some of their single-strategy colleagues.
Like the furniture, take away that whole of market expertise and the IFA world could quickly hit the floor.
Why Harries is leaving Aberdeen is not entirely clear, though the firm is well stocked for high-profile replacements with head of manager research Simon Wood and director of multi-asset Graham Duce.
Still, these and other recent movements, alongside Tony Lanning’s recent failure to raise sufficient assets in JP Morgan’s Fusion Funds range, does raise questions about investors’ appetite for the fund of funds model.
"They quietly and professionally go about their job, within clearly defined risk buckets, without the associated noise and ego of some of their single-strategy colleagues"
With the rise of the wealth manager and multi-asset funds is there a question of multi-manager starting to look a bit dated?
For Victoria Hasler, head of research at Square Mile Investment Consulting & Research, the real issue is cost and perceived value for money.
She explains: “Some of the multi-manager funds are pretty expensive. Given how RDR has affected fees on funds, and given that there has been a whole raft of new multi-asset funds launched with far lower ongoing charges, if anything kills them it will probably be that.
“A lot of the managers are very well respected and have done a good job in delivering what they said they would deliver, but I would suggest they are now facing a bit of a battle against some of their lower-priced competitors”.
| Multi-manager funds by OCF (clean share class) | |
| F&C MM Navigator Progressive | 1.82% |
| Jupiter Merlin Balanced | 1.64% |
| Permier Multi Asset Growth & Income | 1.63% |
| Henderson MM Income & Growth | 1.45% |
| Standard Life Investments MyFolio MultiManager IV | 1.36% |
| Schroder MM Diversity Balanced | 1.32% |
| Source: Square Mile, FE Trustnet | |
Liontrust’s head of multi-asset John Husselbee, a man who himself once went by the multi-manager title, agrees. Now running a model portfolio service, he stresses that investors are becoming much more discerning in their choices.
He explains: “If you want to build a portfolio of active funds then you’re up to around 75-80bps. Adding on our fund management, the platform and VAT it all comes to around 130bps.
“Then the IFA adds his or her charge, usually around 75bps. That puts us in the 2% world. This compares to the overall charge for investors on fund of funds which is closer to 3%.”
He adds: “Fund of funds is hard graft. Consolidation is due and any funds that are sub-scale at less than £300m could be in trouble.”
