View more on these topics

Cazalet claims Moms beat Fofs

Manager of managers should provide superior risk-managed portfolios, strategies and returns compared with fund of funds, according to a report by Cazalet Consulting.

The report, commissioned by Scottish Widows to assess its tie-up with leading multi-manager Russell Investment Group, argues that Fofs are limited because they can only invest in retail funds available in the UK.

It says Moms can focus managers on strategies and parts of the market where they have a competitive advantage, providing better control and finetuning to ensure optimal efficiency.

The report argues that the use of bespoke segregated accounts also helps to avoid gaps and overlaps in portfolios created by differing manager skills while reducing the level of volatility experienced by single managers.

Compared with Fofs, therefore, it says Moms have better risk

controls, institutional-level reporting and increased returns.

Russell and some other Moms take this approach further by employing more than one manager for each asset type, giving a blend of styles for each of the main classes.

The report predicts this method will become established in the retail market and argues that Moms&#39 clean institutional pricing – with no bid/offer spreads – will appeal to investors who would otherwise suffer value erosion.

But Fof managers say the report omits some vital benefits of Fofs and say its flexibility more than outweighs most cost considerations.

The report says: “Compared to a Fof format, a Mom approach should lead to better risk-managed portfolios and strategies, richer, faster institutional quality reporting and superior returns from managers working to their strengths.”

New Star Portfolio head of investment management (Fof) Mark Harris says: “I do not agree with nine-tenths of his argument. Most of his criticisms are not appropriate and I suspect that he has not

researched Fofs as well as Moms. Mom has a place but it is not everything.”

Recommended

FSA requirements hard for small firms – MCCB

The MCCB says that regulation will require firms to submit six monthly reports of around 15 equivalent &#39pages&#39 electronically. The MCCB believes this requirement may result in small firms with a lack of resource or internet access being severely over-burdened,with some firms potentially being forced out of the market. MCCB chief executive Luke March says: […]

Carry back deadline coming up says L&G

IFAs are being reminded of the approach of the January 31, 2004 final deadline to carry back a pension contribution into the 2002/2003 tax year. Legal & General says individuals who have not yet completed their self-assessment tax forms can use carry back to, maximise their individual pension contribution for last tax year and directly […]

Brown to close IHT loophole on homes

The Government plans to close a loophole retrospectively which has helped homeowners to avoid inheritance tax. Homeloan schemes have allowed homeowners who would have been subject to inheritance tax to sell their homes to a trust in return for an IOU. The IOU would then be passed on to their children through another trust and […]

Marshall Williams in Park Row merger

IFA Marshall Williams, which was put out of business by the FSA earlier this year for failing to find professional indemnity cover, has survived through a merger with Park Row. Marshall Williams was ref-used cover by Magian Underwriting Agency a year ago despite having had no claims in five years with the insurer. It was […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com