Abbey has moved its underperforming Scottish Mutual opportunity unit trust to a multi-manager approach because it believes this offers a “framework for three-dimensional investment choice”.
IFAs say it makes sense for providers which are looking to form multi-tied relationships to bring their weaker funds under a multi-manager style rather than wind up or merge them with other funds.
Berns Brett director of fin-ancial planning Peter French says: “When you are an IFA, you deal with so many companies that you can divide your clients' money up and keep tabs on it. If you are a multitie, you are tied to a limited number of companies so you cannot get the same diversity as an IFA.
“Multi-manager funds ena-ble the agent to say to a client: 'Despite the fact that I am tied to these firms, by investing in this fund, I am still giving you access to the whole market.'” French says multi-ties will mean reduced business for some fund management groups as former IFAs may multi-tie elsewhere. In his view, the bigger the provider, the more attractive multi-ties become.
Abbey head of client investment John Kelly says the fund's switch to multi-management is a separate issue to multi-tied arrangements. He says: “In January, we let the internal managers go and moved the fund to State Street but the promise was always to look for a multi-manager. We find in Goldman Sachs and Invesco skill sets that are very attractive. The way they manage money is different. They are expert in areas that we are not.”
Arch Financial Planning managing director Arthur Childs argues there is merit in a provider looking to multi-tie offering multi-manager funds. He says: “If we were going to multi-tie, which we are not, it would be great to be tied to a company such as Cofunds.”