It is always a pleasure to lunch with Ian Chimes, the head of Credit Suisse Asset Management. His down-to-earth manner belies his instinctive grasp of how this great industry works – and he is a Brummie. I may be a Londoner but I have spent enough years working in Birmingham to have formed an affection for Britain's second city.
Over lunch, we talked about the way the multi-manager market is going. He is fortunate to have had one of the more solid and successful teams in this popular area of the market, working out of the Credit Suisse offices adjacent to East London's Petticoat Lane.
Robert Burdett and Gary Potter ran the Rothschild multi-manager service but decided to ally themselves with the Swiss giant at a time when Rothschild was having second thoughts over how to position itself in the investment world in the future.
Multi-manager is now a competitive market. Not only are there many established American houses extending their sphere of operations into the UK and Europe, funds of funds and manager of managers are being adopted by a range of hitherto traditional fund management businesses.
But this is making it hard for new entrants to establish themselves. Even so, Robert and Gary have succeeded in building their operation to a very useful £400m. Fund managers, the poor relation of the industry, are now enjoying premier division status. This is not necessarily helpful for those firms engaged in the money management business. It makes life difficult for fund management groups if they cannot rely on the loyalty of their investment managers.
Given the willingness of some players to wield chequebooks to build market share, it is little wonder that some managers are capitalising on their perceived skills. The development of a star fund manager culture has received much comment, yet there is no easy answer as to whether following a star is preferable to relying on the collegiate approach of a broader team. The truth is that some stars wax and wane and investors can learn, to their cost, that some managers' past successes have been more down to luck.
The multi-manager market, although relatively new, is developing its fair share of stars. But only a minority of people understand the business of researching fund management groups and their fund managers and can turn that information into useful action when running portfolios.
Although these stars are presently unsung, Ian believes their worth will be recognised. Of course, to some the multi-manager approach is not sufficiently exciting. Still, it is gaining ground and will take an increasing percentage of private investor money in the years ahead.
The one thing a portfolio of funds can deliver is wider diversification. Moreover, technological advancement is helping solve the cost issue and enabling a wider choice of options to be made available. Now that so much of the UK stockmarket is controlled by professional managers, the business of sorting out who is good from those who are merely lucky will achieve even greater importance.
As fund management groups recognise the value of having a skilled team on board, rewards could improve to match those available in other areas of the business.