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Insinger trims UK managers

Insinger de Beaufort has dropped Newton and Investec from its UK mandate because it believes the biggest risk to multi-managers is too many holdings leading to a replication of index returns within a double-charging structure.

The company says there is a misconception among multi-managers that the greater the number of underlying managers, the greater the diversification. But it claims there is a greater chance of producing the same returns as the index or that one or more managers will fail.

It has reduced the number of UK managers in its portfolios from six to four. The Newton higher income and Investec UK smaller companies funds are casualties of the cull.

The Newton fund was sold partly because every stock it holds must have a specific yield target, which Insinger regards as inappropriate in the current environment.

It adds that it was reviewing its UK small cap exposure when the resignation of Daniel Hanbury as manager of the Investec fund forced its hand.

Portfolio manager Peter Fitzgerald says: “We prefer more concentrated portfolios and would generally feel uncomfortable with having more than four managers for a single mandate. We had concerns about the value of UK small caps relative to large caps so when Daniel Hanbury left Investec, it forced us to make the decision to sell. We do not have a high turnover generally and we would hope that, barring any more manager departures, we will stick with the managers we have.”

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