Increased regulation is a key reason why IFAs choose multimanager products, according to a survey by Credit Suisse Asset Management.
The survey of more than 500 intermediaries, carried out at CSAM’s multimanager roadshow in September, claims more than a third (36%) of intermediaries choose multimanager products because of increased regulation.
Toby Hogbin, head of product management at CSAM, explains regulations require advisers to justify why they selected a particular fund but outsourcing to a multimanager enables them to avoid this.
Hogbin points out selecting an equity fund is very difficult and there is great potential for IFAs to choose a poor fund. He says IFAs therefore look to multimanagers to mitigate risks.
The survey suggests the main reason for advisers opting for the multimanager route, given by 68% of the respondents, is expert fund selection and diversification.
A further 38% of IFAs cite reduced administration as a key influencer, while other reasons include performance, core/satellite propositions, clients’ risk profiles and asset allocation.
The survey also reveals the average level of investment business in multimanager funds stands at 34% of all investment recommendations and this is expected to increase.
Ian Chimes, managing director of CSAM Funds (UK) Limited, says: “The huge number of funds available to the retail investor in the UK makes selection a time consuming headache for many intermediaries, let alone having to monitor the performance of those funds once they have selected them. So outsourcing these skills to expert multi-manager investors makes perfect sense.”
Robert Burdett, joint head of Credit Suisse Multi-Manager Services, adds: “The spread of investments was the key reason for picking multi-manager funds given by the intermediaries questioned in our survey, which highlights that their clients are demanding the highest levels of diversification, not just by country, sector or style but by fund management group.”
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 Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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