View more on these topics

Chelsea FS highlights multi-manager funds in latest Relegation Zone

A total of £14.5bn of assets still sit in underperforming funds and multi-manager funds are emerging as the primary offender, according to the latest Chelsea Financial Services relegation zone report.

The list contains 101 funds, including 68 new entrants, and 24 of the underperformers are multi-manager funds.

Swip has the largest underperforming fund in the shape of the £1.1bn UK multi-manager equity income fund. Swip recently announced a revamp of the portfolio, bringing in funds from Threadneedle, Neptune and PSigma and dropping Henderson, Jupiter and Rensburg.

Chelsea decides which funds are eligible for the list through a quantitative screening process. Funds that are third or fourth quartile each year for three consecutive years are eligible.

Chelsea Financial Services managing director Darius McDermott says the number of multi-manager funds on the list is no surprise given the extra layer of charges.

He says: “Multi-managers are always going to have to outperform their charges first. If the average total expense ratio charge is 2.5 per cent they have to make that up before they get on a par.”

Among the underperformers are five L&G multi-manager funds, which are managed by Barclays Wealth. They include the balanced, multi-manager global core, multi-manager UK alpha 52, multi-manager UK alpha and multi-manager US alpha 52 funds, which have heavily underperformed in the past three years.

McDermott says: “The Barclays’ products are overly represented and I imagine they are aware of this as persistent offenders. It was also disappointing to see the introduction of the £46.9m Rensburg UK managers focus trust to the list given that it is managed by all their UK team.”

For more see this week’s Money Marketing.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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