In the latest issue of the multi-manager guide, Blending Talents, principal consultant (investments) Fraser Donaldson says uncertain market conditions are prompting more managers to invest in cash as an asset class and keep costs down through ETFs, but do so to varying degrees.
Donaldson says neither trend is a bad thing and that holding cash may be a temporary measure while markets are uncertain, but investors need to be aware of how their manager is investing.
Big cash weightings may have implications for advisers who make asset allocation decisions for clients and multi-manager who are not fully invested risk missing the boat in rising markets.
Similarly, Donaldson says ETFs are not a bad thing but some investors are fans of active management and buy multi-manager funds on that basis.
Donaldson says: “Multi-manager is a collection of fund managers who buy other fund managers and relying on more than one can diversify the risk of those funds. It would not hurt to choose two.”