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F&C aims to keep distribution fund ahead of increasing competition

F&C Asset Management is confident that its multi-manager distribution fund has a competitive advantage over other companies which are entering this market as an alternative to with-profits.

The distribution fund recently hit the £250m mark at around the same time as Fidelity set up its multi-manager distribution fund.

F&C concedes that the market is competitive but believes that its fund size, track record and other distinguishing features will keep it ahead of the growing competition.

The firm says £250m is a good size for a multi-manager fund because critical mass means that expenses come down.

Bigger funds have the same fixed costs as smaller funds such as registrar’s fees but these are easily absorbed across wider asset pools so the total expense ratio is lower.

Multi-managers with bigger funds may also have more scope to negotiate down the charges of the underlying funds and F&C believes that its tendency to hold funds for the longer term boosts its bargaining power.

F&C also highlights the transparency of its holdings and its investment protection facility as distinguishing features.

Director (head of communications) Jason Hollands says: “The investment protection feature helps to position the fund as an alternative to with-profits.

“It is an attractive feature to have if a person dies and the value of the investment has fallen. Some multi-managers will not tell you what they are holding or will only tell you when the information is out of date.

“We send out an email alert to IFAs explaining what we have done and why. When we look at the underlying managers, we want to know what they are holding – so why shouldn’t IFAs look at our funds in the same light?”

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