Nearly all advisers who already use multimanager funds expect to continue or increase their reliance on such services in future, according to research published by Fidelity International.
Of the 163 advisers polled for the research, some 82% said they already use multimanager funds, and of those 98% expect to maintain or increase their use.
A third of advisers in the research use multimanager funds for between 25%-50% of all business done. Just more than a fifth, 22%, again use multimanager for more than half the business they do.
Those using multimanager also generally rely on more than a single provider: 94% of those polled said they use more than one provider, selecting them according to the criteria of, in order of importance, performance, risk-return profile and manager resources.
The research has also thrown up key reasons why advisers use multimanager. For those who do use this approach, the single most important reason is the ability to perform ongoing monitoring and portfolio oversight (cited by 85%).
The second key reason is the ability to outsource fund selection (72%) and its position as a strong investment solution for clients (60%). Lower down the order of reasons is cited the ability to manage regulatory risk (49%) and the ability to free up time to build and maintain client relationships.
The latter was cited by only about a third, 32%, as a key reason. Benefits from using the multimanager approach found by the research include access to diversified portfolios through single investments, and access to ‘best-in-breed’ funds through small minimum investments.
Peter Hicks, head of IFA channel, says he expects use of multimanager to maintain the growth rates seen so far.
“We have seen a significant shift towards the use of multi-manager funds in recent years, 2006 in particular, and the findings from our research demonstrate this. This is a trend we expect to continue, with multi-manager assets forecast to grow even faster over the next few years, averaging an annual rate of 18% between now and 2009.”
He adds the differences in percentages attributable to reasons for using multimanager services, such as portfolio oversight and outsourcing fund selection as compared with the relatively lower number of advisers citing the ability to find more time for clients is not indicative of advisers prefering one reason over another.
From the results and other evidence, Hicks sees the oversight of portfolios as being driven by issues such as MiFID and TCF principles, both of which come into effect through next year.
He also sees a link between the spread of use of multimanager and the emergence of investment platforms, suggesting similarities in, for example, the efficiency arguments mean in concept terms there is "not a big leap" from one to the other.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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