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Discretionary firms pose threat to multi-manager

Defaqto says discretionary fund managers are creeping into the market as potential competitors to multi-manager products.

In the 13th issue of its multi-manager guide Blending Talents, Defaqto says that open architecture products such as self-invested personal pensions and offshore bonds already provide links to discretionary fund managers, with some products offering a panel of managers.

The report points out that the mid-1990s saw the demise of the retail dis- cretionary management service and most of these managers that went on to run multi-manager funds, such as John Chatfeild-Roberts, Sam Liddle, Robert Burdett and Gary Potter, are well known to the retail market.

Blending Talents Insight analyst, funds and author of the report Fraser Donaldson says a lot of advisers will be thinking of outsourcing their investment decisions as they review their businesses in the wake of the retail distribution review.

Many will outsource to multi-managers but discretionary fund managers, who see the retail IFA market as a way to increase assets, are an alternative.

Defaqto expects several discretionary fund management services to focus on the retail IFA market over the next couple of years. It says that there is a perception of offering a premium service to clients through discretionary fund managers, which might appeal to high-net-worth clients.

Donaldson says: “Discretionary managers are not flooding the market but a lot are keen to put a stake in the ground. However, getting evidence of past performance from them can be tricky. Many offer a bespoke service and do not provide any past performance. With multi-manager, the past performance is all there.”


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