Once again that behemoth of the managed solutions sector Skandia dominated this year's RealAdviser Awards - walking away with four of seven trophies on offer in the life and pensions section. Elsewhere, the openness of competition highlights the health of the marketplace
The only constant in the world of financial services is change. But in a market where growth and innovation invariably rub shoulders with bandwagon and fad, it is understandable for advisers to wonder what truly makes certain offerings from the investment houses, life offices and technology providers the cream of the crop. Advisers need all the guidance on the best products and providers they can get.
The RealAdviser Awards look to provide exactly that guidance by highlighting the star performers who have excelled in the managed solutions arena. As with last year, our awards are split into two categories with the life and pensions winners voted for by RealAdviser readers, as canvassed by Incisive Research, while all but one of the multi-manager awards were decided by our panel of judges (see right), and rewarded consistent outperformance over a three-year span based on figures from Lipper. The other multi-manager award, for best research team, was voted on by the managers of the 38 funds rated AAA by OBSR.
Skandia's dominance in the life and pensions arena continued this year as the group scooped four of the seven available awards in the shape of Best Provider of Third-Party Fund Links, Best Technology, Best Wrap Provider and Best Overall Service.
The multi-manager side was more evenly contested with New Star the only group to pick up an award in more than one category, winning Best Group and Best Specialist Multi-Manager fund. Jupiter, traditionally dominant on the multi-manager side of the RealAdviser Awards, won Best International Fund, while Gartmore won Best Research Team.
As with last year, a special mention goes to Fitzwilliam Multi-Manager, which retained the award for Best Balanced Growth fund. The fund is run by accounting group BDO Stoy Hayward and has proved once again it can compete with the big boys in a fiercely competitive sector.
So while Skandia continues to remain ahead of the chasing pack in the life and pensions sector, the levelling of the multi-manager playing field gives a number of fund groups plenty to aspire to for 2007. Congratulations to all the winners.
★Best Overall Service
★Best Provider of Third Party Links
★Best Wrap Provider
The pioneer of third-party links, Skandia broke new ground some 20 years ago when it introduced the idea of using external managers to manage life and pensions money. Although the market dug its heels in before coming round to the group's way of thinking, poor performance of in-house funds and lack of enthusiasm for pensions among the general public led to many advisers seeing Skandia's option as a more efficient way to run their businesses. This gave Skandia a head start on some of its rivals in the industry and the behemoth of the marketplace has never looked back.
The group now offers products across a vast array of investment areas and has garnered plaudits for its high levels of service. The Self Select Range, which recently passed £25bn in funds under management, now offers access to approximately 400 funds from 45 fund groups and is still constantly expanding. Skandia makes no judgement calls on these funds, with additions solely based on intermediary demand.
SkandiaWrap has also made significant advances this year, such as the integration of its own Sipp into the platform back in January. The new development allows advisers quickly and easily to access valuations for their clients' Sipps, use the e-commerce tools within SkandiaWrap to monitor the performance of the underlying portfolio and switch investments where appropriate.
The next year or so should prove a busy time for Skandia. The group was acquired by South African insurance company Old Mutual earlier this year - a deal that means both Skandia and Selestia are now owned by the same parent. As such, 2007 will see the integration of these two brands into one platform that looks set to be the new market-leading proposition on these shores.
★Best Fund Supermarket
With expertise derived from its established namesake across the pond, FundsNetwork was one of the first groups to build a comprehensive fund supermarket for the UK market. Since launch in June 2000, the group has nearly quadrupled the number of fund providers from its initial 14, with 900 funds now available from some 53 fund managers, while attracting some £5.5bn in assets.
The group, which retained its title from 2005, has a plethora of tools to help both advisers and their clients cover areas such as fund selection, reporting and software integration. FundsNetwork continually adds new tools in conjunction with demand from advisers.
New launches in the past 12 months include a portfolio planner, which offers the ability to create, manage and view portfolio investment plans for clients as well as Sipp and bond quotes, which may be requested by telephone, fax or email from the group's dedicated Sipp business helpline. Advisers can opt for 'QuickQuotes' via email or post, or request a full quote pack that contains all of the key documentation for the Sipp, including application form, key features, terms and conditions, client guide, FundsNetwork terms of business and both fund options lists.
The Sipp and bond quotes are to supplement the onshore investment bond and Sipp wrappers, which have also both been launched in the past 12 months. Both provided by Standard Life, the bond offers access to some 150 life funds, while the Sipp offers more than 1,000 fund choices and has already been awarded a five-star rating by industry specialist Defaqto.
AEGON SCOTTISH EQUITABLE
★Best Pension Provider
Formed back in 1831, Scottish Equitable fell under the Aegon group banner in 1994 - hence the recent name change to Aegon Scottish Equitable. The group has been a major provider in the pensions arena for some time, operating by the ethos "it's never too late" as anyone under the age of 75 can contribute to a pension scheme. The group offers a number of different options into the pension market, whether it be through personal, stakeholder, executive or flexible pensions, retirement policies or Sipps.
Aegon Scottish Equitable's Sipp proposition is designed to be as flexible as possible in order to attract people who are both working and retired. Clients can choose to have their full portfolio self-invested from day one or, if they would like to become more familiar with how a Sipp works, they can have a part of their portfolio self-invested and leave the rest invested with the group and its external fund managers. Alternatively, they can leave the investment decisions to their financial adviser or appoint a discretionary fund manager to run the portfolio for them.
In July 2006, the provider also launched a group Sipp that accesses 997 funds from 43 fund managers as well as offering online valuations and the use of the Morningstar research and evaluation tool. Key features of the product design are simplicity and choice. Aegon Scottish Equitable has designed the group Sipp to be as easy to set up as a group personal pension plan, which it believes will appeal to advisers.
While a Group Sipp gives greater flexibility and choice in meeting retirement goals, Aegon Scottish Equitable believes the majority of members will not use the self-investment function. As clients will only pay for self-investment if and when they use it, the Group Sipp will be able to cover the investment needs of all employees cost-effectively under a single contract.
★Best Structured Product Provider
Since its entry into the retail market back in 2003, Barclays has moved swiftly to become a leading light in the world of structured products. The group offers products across three pillars of investment - growth, offshore and, most recently, income, after it teamed up with institutional fund manager Morley earlier this year to offer two income funds for those at both the higher and lower end of the risk profile spectrum.
The Global Cautious Income fund offers investors a target rate of income equal to 5.5% a year or 1% above UK base rate, if higher, while the Global Balanced portfolio gives investors a target rate of income equal to 7% a year or 2.5% above UK base rate, if higher.
Much of Barclays's product offering resides in the growth sector of the market. The five-strong range consists of two Protected FTSE Plans, which cover three and five-year periods, a six-year Minimum Return Plan, a five-year Super Tracker, which offers five times any rise in the FTSE 100 index up to 50%, and a five-year Guaranteed Account, offering 110% of any rise in the FTSE 100 index (subject to averaging).
Barclays also designs a series of structured deposits exclusively for investors within an offshore life assurance bond. These deposits give clients the opportunity to select a cash asset linked to the growth potential of equities, but with the added comfort of a capital guarantee.
BDO STOY HAYWARD
★Best Balanced Growth Fund (Fitzwilliam Multi-Manager)
Congratulations must go to Fitzwilliam Multi-Manager for once again proving that the depth of one's pockets is not the only factor that determines success in fund management. For the second year in a row, the fund and its managers have beaten off stiff opposition from some of the heavyweight players of the multi-manager sector to pick up the award for Best Balanced Growth Fund.
The fund, which is advised by BDO Stoy Hayward Investment Management, the wealth management arm of BDO Stoy Hayward LLP, has assets approaching £100m and has been comfortably top-quartile over the past three, five and 10 years, illustrating the strength and consistency of its track record.
According to Sharon Segal, investment director at BDO Stoy Hayward Investment Management and lead manager on the fund, a large portion of the portfolio's success is down to having conviction in picking good fund managers. "We do lots of due diligence on every manager - the basis of it being a robust quantitative and qualitative screening to establish all the parameters around the fund," she says. "This research gives us the confidence to know we're picking the right guys for the job. When we make these choices, we don't look to make small bets, we place 7%, 8% or 9% of the fund in that manager."
The conviction in chosen managers is reflected in the portfolio, which is confined to a maximum of 20 funds and only holds 17 at the moment. Segal goes on to say the fund is not focused on making big calls on asset allocation, but uses tactical shifts when the team can genuinely add value. "We have about 50% of the fund in the UK, with scope to go as high as 60% and as low as 40%," she adds. "Some asset allocation bets, for example placing 20% in Japan, are calls we just will not make - our focus has always been to pick the best fund managers on the market."
She also believes that being in frequent contact with the managers the team invests in allows them to know exactly what's going on in their portfolios at any time. Segal, a former small and mid-cap manager at Morley, is supported by a team including Kristian Cassar and Stuart Clark. Cassar, who has six years' experience in fund management, is responsible for developing the group's fixed income offering while Clark has five years' experience in quantitative and qualitative analysis of funds and portfolio construction.
Top holdings in the portfolio currently include Rensburg UK Select Growth, managed by Mark Hall, while the fantastic performance of Neil Woodford's Income fund has meant the team has had to top-slice its exposure to the fund from the maximum 10% to 8%. The fund also has a large exposure to a number of boutique houses, with approximately 30% of the underlying funds in that area due to their policy of equity participation.
Segal says the team is just as meticulous in their selling discipline as they are with their buying. The recent sale of all Fidelity funds in the portfolio shows that the team is not afraid to sell managers with a high reputation if they believe it is in the interests of investors.
★Best Multi-Manager Group
★Best Specialist Multi-Manager Fund (New Star European Ptfl)
The only group to walk away with more than one multi-manager accolade at the 2006 RealAdviser Awards, New Star has quickly risen to the upper echelons of the fund management industry since its dramatic debut in 2001. The fund of funds team, headed by Mark Harris and Craig Heron, manages an eight-strong range of funds, five of which are global portfolios - ranged by increasing relative risk from cautious to tactical - as well as three regional portfolios covering Asia, Europe and the US.
New Star's success is driven by a meticulous investment process. Any fund chosen for investment has to pass a number of tests, including being benchmarked against similar funds and screened statistically to ascertain manager style and relative risk. This all comes before an investment team meeting to discuss the results of the screening and any further action. The team also looks to add value through portfolio construction and making use of the right funds in their respective environment. Seven of the funds now have three-year track records, with only the Asia Portfolio not managing first or second-quartile performance over that period.
New Star European Portfolio, which returned 83.48% over three years to 30 June 2006 as compared with 61.62% by its benchmark FTSE Europe ex UK (Capital Return) index, retained its title of Best Specialist Multi-Manager Fund. The fund, which has its biggest weightings in Germany and France, continues to benefit from strong returns from the likes of Artemis European Growth, Merrill Lynch European Dynamic and Jupiter Emerging European Opportunities.
★ Best Multi-Manager Growth Fund (M&G Managed Growth)
Shortlisted for three RealAdviser awards, the recent turnaround in M&G's equity-oriented fortunes has been impressive. Despite a strong investment pedigree that dates back to the beginning of the 20th century, in recent years the group had appeared to put more emphasis on building up its fixed interest expertise to the detriment, some commentators suggested, of its equity arm.
The rot looks to have been stopped following the appointment of David Jane as head of equities in September 2002 and his subsequent reorganisation of the investment team. For while M&G can now boast its own outward-facing fund of funds team - in 2005 it took the management of its unfettered funds of funds away from Cazenove and placed the mandates under the umbrella of the portfolio management group, headed by Mark Thompson - it is a fettered fund of funds that has scooped this year's prize for Best Multi-Manager Growth Fund.
M&G Managed Growth, which has been managed for the past decade by Graham French, is now some £728m in size and has been built up on the back of the strong successes of the group's internal funds in recent years. The fund has returned 92.14% over the three years to 30 June 2006, compared with 47.56% by its benchmark FTSE World (Total Return) index.
While French will use his own judgment to decide fund manager weightings in the portfolio, asset allocation decisions are also heavily considered. The group believes that as national boundaries become less important, asset allocation should thus reflect both thematic and industry factors as opposed to geographical ones.
The top holding in the fund is currently Tom Dobell's Recovery fund at 18.7%, while French's own International Growth (18.1%) and Global Basics (17.9%) vehicles are second and third respectively. In terms of sectors, the fund has 15.6% in resources, with a further 11.9% in basic industries and 11% in non-cyclical consumer goods.
★Best Cautious & Income Multi-Manager Fund
(Hargreaves Lansdown Income & Growth Portfolio Trust)
Despite being more widely known for its large advisory practice, Hargreaves Lansdown has actually been providing independent research to private investors since 1981. Hargreaves Lansdown's multi-manager vehicles are focused on relative returns, with the firm believing differing returns on funds in the same sector are down to whether the manager was exposed to either growth or value stocks, the size of companies in which they were invested and, finally, their stock selection ability.
Managed by Lee Gardhouse, the Income & Growth Portfolio trust looks to offer a one-stop shop, blending together what the group sees as the two broad styles of equity income investing - pure value and the barbell approach - in one managed portfolio. This portfolio is heavily concentrated with only 11 underlying funds, all of which would be changed without hesitation should new opportunities arise or funds go off the boil.
The success of the fund is built off the back of this philosophy, with the equity income choices offering a virtual who's who of the cream of the UK Equity Income sector. The top four holdings in the trust, which make up two-thirds of the portfolio, are respectively the Neil Woodford-run Invesco Perpetual Income, Adrian Frost's Artemis Income, Jupiter Income, which is managed by Tony Nutt, and Axa Framlington Equity Income, run by George Luckraft.
* Best International Multi-Manager Fund
(Jupiter Merlin Worldwide Portfolio)
The dominant force in both our 2004 and 2005 awards, it seems only fitting Jupiter should again get in on the act. Following the purchase of the Lazard multi-manager offering in 2001, the triumvirate of John Chatfeild-Roberts, Algy Smith-Maxwell and Peter Lawery have quickly brought the group to the pinnacle of the industry through the consistent success of its four-strong Merlin range of funds - Balanced, Growth, Income and Worldwide.
Jupiter's ongoing success has been based on the team's ability to make successful asset allocation calls in all market environments. Taking the view that adding value through asset allocation is a 'moral obligation', the group sees changing markets and volatility - see Lawery's comments on page 35 - as an ideal opportunity to make money with the key to success being a contrarian attitude. This comes at a time when the group believes the declining influence of the western world is happening in conjunction with the growth of less industrialised countries and the development of the 'Bric' nations of Brazil, Russia, India and China. The Worldwide Portfolio retained its title having returned 77.16% over the three years to 30 June 2006, compared with 47.56% by its benchmark FTSE World (Total Return) index.
*Best Multi-Manager Research Team
Joining Gartmore back in 2003, Bambos Hambi and Marcus Brookes wasted no time in turning the group into one of the industry's bigger names in the fund of funds arena. The winner of the award for Best Research Team now has a quintet of portfolios that have largely been first or second quartile while three of the portfolios have received AA or A ratings from Old Broad Street Research and Standard & Poor's respectively.
The team looks to add value through fund selection, portfolio construction and asset allocation, with the latter outsourced to Peter Gale, a specialist in that area as Gartmore's head of tactical asset allocation and strategy group. Visiting approximately 1,000 fund managers a year, the Gartmore team uses its own 'Five Ps' process - an analysis in the five key areas of philosophy, process, people, performance and price. It also makes use of risk software such as Style Research and Bloomberg Analytics to help it take on what it describes as 'intended risk'.
This diligence has led to Gartmore picking some of the strongest performers in the past 12 months. Funds such as New Star European Growth, Thames River Global Emerging Markets and Neptune Income have formed the crux of its multi-manager offerings, all of which have outperformed the market average by some distance.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress