The widening of fund rules as part of the UK adoption of the EU product directive will add to produc...
The widening of fund rules as part of the UK adoption of the EU product directive will add to product development in the retail market.
Jeffrey Mushens, an investment and marketing consultant, said the advantage of mixed funds is that they offer additional flexibility in management and product development.
For example, he said, if a fund manager was seeking exposure to technology but did not have the expertise in this area, he could invest in another collective or several in order to gain that exposure.
Nick Wells, product and communications director at Artemis, said mixed funds will be ideal for groups such as banks that want to reach a wide audience. He added: 'They certainly have merits, but they will not replace funds of funds. Managers won't be able to pick the best of breed in all areas, which is what funds of funds do. You still need to be good at investing in all areas.'
Wells' view is that mixed funds are a useful addition to funds of funds but not a replacement for them. He also said he thinks the new vehicles will be useful for pension funds, particularly stakeholder.
Brian Nicholson, Edinburgh Fund Managers' director of product management, said the changes proposed under the discussion paper allowed for slow implementation, some up to 2007, so alterations would not be forced on fund managers immediately.
He added that the generic definition of 'mixed funds' and easier facilitation of single portfolio funds to adopt a fund of funds structure, could mean that more players will soon enter the multi-manager market. 'It should extend the market and increase the number of funds but we are far from having a crowded fund of funds market,' he said.
Patrick Cooper, head of retail at Axa Investment Managers, said that although there is still a wait for the Inland Revenue with regard to the Pep and Isa status of these new vehicles, he welcomes the addition. The introduction of limited issue funds enhances the ability of onshore portfolios to compete with offshore counterparts and though the use of guarantees on funds may be coming late in the cycle, the move is still encouraging, he noted.
Richard Eats, communications director at Threadneedle Investments, applauded the UK's early adoption of the product directive but said its true value will have to wait until other EU members move to incorporate the rules into their own funds regimes. Eats did, however, question the need to allow existing unit trusts and Oeics to convert to limited issue funds.
He noted there is a lot of work involved in a simple conversion and any redirection of the investment objective of the fund would require unitholder approval, making the ease of converting an existing fund almost on par with launching a new fund.
Partner Insight: Continuing the Architas education series for clients.
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