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Fund-of-funds AUM soars by more than 600% in a decade

The total amount of assets under management in fund of funds portfolios has soared by more than 600 per cent over the past decade, analysis of the latest Investment Management Association figures has revealed.

Since the start of 2013, AUM in fund of funds has risen by almost 9 per cent from £76bn.

Demand has been accelerating over the past 10 years, with the only year-on-year fall in AUA occuring during the onset of the financial crisis between 2007 and 2008. The latest IMA statistics show the amount of assets held in fund of funds by the end of 2003 was £11.8bn, representing just under 5 per cent of overall funds under management.

But the trade body figures reveal that as at the end of August, the level of investment in fund of funds has since rocketed to £83bn, a 600 per cent jump since 2003 and equating to more than 11 per cent of total industry funds.

However, advisers believe the rise in their growing appeal is a mixed blessing. Chase de Vere head of communications Patrick Connolly says: “Fund of funds have been an easy sell for advisers in the run-up to the RDR. But the appeal has been there since the technology boom and bust. These portfolios are convenient for investors and advisers who do not feel confident in putting their own portfolio together. While they offer the benefit of diversification, performance is not always great and the charges are inevitably higher.”

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