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Absolute return is new yardstick

Multi-managers are more focused on absolute returns as an indication of performance since the credit crunch, according to Swip.

The company says the yardstick for multi-managers used to be how they were performing relative to their peer group but this has changed because investors lost money when the global financial crisis set in.

Head of multi-manager distribution Bernard Henshall says it is how well multi-managers are doing in absolute terms that matters now. He says IFAs have been bruised by their recent investment experiences and want to know what the outcome of investing in a particular fund will be for their clients. Advisers also want to understand what the multi-managers are doing and the rationale for the way they run money.

Henshall says although there will always be a place for aggressively managed funds that deliver returns over time, the majority of advisers are interested in funds focused on the preservation of investors’ capital. He expects funds of funds to become more popular with advisers, particularly those with a big client base, as it is difficult for advisers to make their own asset allocation decisions when market conditions are unpredictable.


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