Fears over diversification

Fund of funds managers are responding to tough market conditions by having fewer underlying holdings. This concentration in multi-manager portfolios is being matched by them looking to buy into vehicles that have concentrated stock lists, such as high alpha and focus funds. Aidan Kearney, who runs the Artemis Premier Funds Service, said managers who over-diversify risk diluting returns. He said: 'Some multi-managers have a broad holding across funds with about 4% to 5% allocated to each. I take a more concentrated view. In Artemis' Equity Income Fund there are seven holdings and in UK...