Launched in November 1999, the three original Elite Funds were designed to provide pension investors with real choice. The Elite Cautious, Balanced and Stockmarket Managed Funds offered pension investors access to external expertise controlled by our Investment Manager.
Winterthur was one of the first life companies to recognise its core strengths – developing products to suit high net worth clients, offering technical expertise, and building strong relationships with fund groups. Winterthur now offers life and pension investors access to four managed and six sector multimanager funds. Experience over the last eight years has indicated that providing choice and security through diversified and rigorously managed funds is the right approach.
The main drivers
Initial demand for the Elite Fund of Funds Range was driven by two main factors: investor disillusionment with fashionable funds and a recognition that outsourcing investment management to an expert could offer benefits to clients.
One well managed multimanager fund can offer clients access to diversification by asset class, fund and fund manager – offering an attractive alternative to more traditional life company funds.
It is now also recognised that outsourcing investment management brings benefits to both advisers and clients.
Shifting up a gear
Bernard firmly believes that multimanager funds are becoming a default recommendation, and states “increasing regulatory burdens and a realisation that multimanager providers have greater access to investment research and resources
have increased their attractiveness”.
Constructing and monitoring portfolios can place an impossible burden on already over-stretched advisers. Recommending a multimanager fund means that clients benefit from the expertise of the Investment Manager and advisers have time to concentrate on what they excel at – providing financial advice. A further benefit is more time to devote to developing and managing their business.
Bernard recognises that there is increasing pressure on advisers to demonstrate how they monitor client portfolios. “This inevitably requires more time and increases costs; additionally, Treating Customers Fairly requirements means advisers must be able to demonstrate they have treated each client in the same manner.” Multimanager funds can often be the solution.
A good track record
The multimanager market is now a crowded place, but as Winterthur committed early we can offer clients a long term track record of consistent performance. According to Colin Taylor, Winterthur’s Investment Manager, “we have been running the Elite Fund of Funds Range for nearly seven years and we have proved the process works.”
The Elite Funds operate on a broadly style neutral basis with a low turnover approach. Each Fund has a passive or low risk core with the remainder comprised of actively managed complementary funds. This is quite different to most other fund of funds offerings, especially in the retail market.
Colin does not chase short term outperformance, but invests in funds that he believes will add value over the long term. The Elite Funds aim to provide steady, non-volatile outperformance. Colin is not unduly concerned with short term under performance; he manages the funds for the long term. This approach is particularly suited to Winterthur’s life and pension products.
Keeping pace
The pace and development of the multimanager market has been rapid over the past seven years, and both Colin and Bernard are expecting similar growth in the future. As the number of more informed investors increases they will demand better value and more sophisticated products – a contributory factor to the launch of the Elite Sector Funds.
According to Colin, “the launch of the sector funds recognised that some advisers are comfortable creating bespoke asset allocations for their clients, but don’t necessarily want to pick the funds – or continue to monitor them”.
The Sector Funds may also be appropriate for clients who want a small, but diversified and cost efficient exposure to particular markets. Why invest in one fund when you can access a range of styles, carefully managed and closely monitored, all within one fund. They appeal to advisers who have the resources and expertise to focus on a particular asset class, for example UK equities, but would prefer to outsource the tactical management of the rest of the portfolio.
Remaining on track
With over £500m under management and over 1,500 supporting advisers, Winterthur is pleased with the success of the Elite Fund of Funds Range. But, according to Bernard, it doesn’t stop there.
“We have the expertise, systems and controls to carry out and maintain due diligence over fund managers and their investment processes, and can demonstrate that we follow our published investment process.”
Winterthur will continue to demonstrate this in the future, allowing advisers to feel confident when recommending the Elite Fund of Funds range.
