Gartmore has altered its fund of funds, allowing it to invest in funds managed by other investment houses.
The arrival of Bambos Hambi and the rest of the multi-manager team in November last year prompted the decision to rename the existing fund the Gartmore Portfolio: balanced strategy fund and change its remit.
The new fund will hold a set of lower-risk core funds and will boost the return from these by including some high-risk satellite funds. The multi-manager will focus carefully on fund selection, portfolio construction and asset allocation. In terms of asset allocation, the team will draw on the experience of Pete Gale, Gartmore's head of private equity. Gartmore funds will not be selected as the team wants to promote decision making that is completely independent of its own company.
When selecting funds for the portfolio, the team need to understand each fund's aim and how the fund manager is trying to meet this objective. They will assess the strengths and weaknesses or each fund as this will help them blend the funds together into a suitable portfolio which will match the aim of the fund of funds.
The underlying funds are assessed on performance and through qualitative research methods such as meetings with the fund managers. Few investors would have this level of access to managers or the time and knowledge to trawl through the masses of information on various funds. Similarly, IFAs could easily get bogged down in this to the detriment of their other duties.
Like all funds of funds, Gartmore's has a element of double charging as investors pay charges on the fund of funds itself and the underlying funds. However, investors who are put off by this may be keener to invest if they realised Gartmore can negotiate discounts on these fees because they are investing pooled amounts. This means they would not be as expensive as they are when investors make separate investments in funds of their own choice.