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Eye to the future

Gartmore has introduced four multi-manager funds to complement its Gartmore portfolio: balanced strategy fund.

One of the new funds, the Gartmore port-folio: UK high alpha fund, aims for growth by investing in funds that invest mainly in UK equities.

A core and satellite approach means relatively lower-risk core UK funds will be complemented by a smaller number of higher-risk satellite funds. The first step is researching the fund universe to identify which funds are most likely to perform well in the future.

The management team then decides on the best combination of funds to meet the multi-manager fund&#39s risk profile and objectives, ensuring diversity of region and asset class. This will involve the assessment of factors such as the strengths and weaknesses of both the fund and the investment team behind it.

Gartmore will not invest in its own funds to ensure there are no conflicts of interest and says it can negotiate discounted annual management charges on the underlying funds, some of which are not available directly to retail investors.

A performance-related fee structure will take effect after the first 12 months so the annual management charge will increase or reduce to between 1 per cent and 1.75 per cent depending on performance.

Some IFAs like multi-manager funds bec-ause investment decisions are delegated to specialists who can constantly monitor the portfolio but this inevitably involves another level of charges which put some investors off.

A performance-related fee structure recognises that the charges must be justified by the results and may be more appealing than funds which charge a flat fee.

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