Consistent performance eludes UK multi-manager funds

Few UK multi-manager funds have managed to perform consistently since 2008, even though they are increasingly popular, research by Defaqto has shown.

Defaqto’s QuantRater, which assigns ratings to funds from 1 to 5 based on their consistency and performance, found that of the 184 multi-manager funds rated for the UK market, only 25 managed to maintain a rating of 3, 4 or 5 since June 2008.

However, amid global uncertainty, the multi-manager market continues to grow. Defaqto’s Guide to Multi-managers shows average cash positions in multi-manager funds up by 0.5%. Defaqto’s latest survey of platform users, completed in January, found that 26% currently outsource to a multi-manager.

Fraser Donaldson, insight analyst for funds at Defaqto, said: “With nine months to go until the new distribution landscape as mapped by the [UK] Retail Distribution Review unfolds, the multi-manager industry continues to grow as advisers use these funds as a partial outsourcing of their investment process for clients looking for a simple managed solution.”

“For those advisers that buy into multi-manager investing as an outsourcing solution, there is a wide range of processes that can be adopted. However, what is important for advisers to remember is whichever methodology they choose to follow, investment responsibility cannot be negated completely. There are still hundreds of multi-manager funds to choose from and it is here, in the selection process, that due diligence still needs to be carried out.”

 

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