Last week, Gartmore celebrated a year since introducing its full range of five multi-manager funds. How is the firm performing?Bestinvest business development manager Justin Modray views Gartmore as a steady performer pulling out of a dull, institutional past. He likes some of the firm’s managers but says it is not a provider where you can go for everything. Modray likes the UK focus fund run by Ashley Willing and Simon King. It is ranked 39th out of 259 funds in the UK all companies sector over three years, returning 75 per cent to October 10. Over the last year, it has slipped back to 220th out of 291 funds but Modray says the strong views of Willing and King have raised volatility and he still backs them. Modray says: “Gartmore has had a dull image histor- ically but it has some good performing funds which are pulling them out of that. On the UK focus fund, the firm has also introduced a performance element to its annual management charge so that, if it is not top quartile over a quarter, the charge reduces from 2 to 1.25 per cent. This is certainly a lot better than some other groups and it is a move we like.” Jamieson Financial director Bruce Jamieson says Gartmore has a less prominent image than some of its rivals. He has backed away from the UK focus fund because of the recent drop in performance and has also pulled out of Roger Guy’s European select opportu- nities fund, which he says has gone off the boil since growing to over 1.6bn. Hargreaves Lansdown senior investment analyst Meera Patel says: “As Roger’s assets have grown to over 1.6bn, I do wonder whether he might be losing his focus. I would also question what incentive there is for him to run his long-only fund when he also gets a huge bonus for running a hedge fund.” Guy’s long-only fund has returned 78 per cent over three years to October 10, 2005 and is ranked 41st of 87 funds in the European sector against an average of 81 per cent. The top-performing fund in the sector is Artemis European growth run by Philip Wolstencroft, which has returned 124.6 per cent. Modray’s view is that Guy still has the capability to run the fund but that his performance over the last three years has been knocked by some unfortunate stock-picking and timing decisions. Gartmore head of UK sales Rod Aldridge says: “If you look at Roger’s performance, it has been consistent ever since the fund went over 1bn in 1998. Roger is as focused as he ever has been. The fund had an average last two years, having to contend with the significant outperformance of small-cap firms but it is still taking good flows.” On the multi-manager side, the firm has five funds – cautious, active, balanced, UK high alpha and global high alpha. They are run by Bambos Hambi and Marcus Brookes and have above-average performance for their sector over a year. The active fund is 28th of 75 funds in the active managed sector while the cautious fund is 12th of 50 funds in the cautious managed sector. But with top of second quartile performance, they are struggling to turn the heads of IFAs. Jamieson says: “Why should I go to Gartmore for multi-manager when there are better performers out there? The Credit Suisse, Fidelity and Jupiter multi-manager funds come to mind.” Hambi says four of the five funds are 26th percentile or better but they are achiev- ing this performance with bottom-quartile volatility. He stresses that investors want consistency of performance in all economic cond- itions and believes that, over a five-year period, all his funds could be top decile. Looking at other multi-managers, Hambi stresses the volatility issue. He says: “If you look at people like Jupiter, they have more focused portfolios. For example, we use three US funds in our portfolios, giving performance no matter what the key driver is in the States. Jupiter just has one, so it has got all its eggs in one basket. It is also taking quite punchy positions in terms of asset allocation. Investors should see us as more consistent.” Hambi says investors will not buy a fund if it is second quartile and that he is aiming for top-quartile performance but with more consistency than some of his rivals. Over the last year, Jupiter’s Merlin growth portfolio has returned 26.8 per cent compared with Gartmore’s active fund returning 20.8 per cent. Jupiter head of multi-manager John Chatfeild-Roberts says: “There are a number of approaches to running funds of funds and it is up to IFAs to decide which best suits their clients’ needs. We do not believe the number of funds we hold or the asset allocation decisions we make are risky. The number of stocks held by the underlying portfolios is, for example, typically in excess of 1,000. I do not think that is particularly concentrated and, if we believe only one fund in a particular area is worth holding, such as Findlay Park US smaller companies, why hold more?” Aldridge says a focus on short-term performance is not appropriate where multi-manager is concerned and investors are looking for longer-term performance, which he is confident of achieving.