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Investment view

Wasn&#39t September a miserable month? I am, of course, talking about the weather. So far as the market is concerned, it was more Indian summerish. As the third quarter of 2004 drew to a close, the FTSE 100 index was flirting with 4,600 – within spitting distance of its two-year high. This despite oil having gone through $50 a barrel.

Oil has been a continuing topic this year. The price of oil dictates the cost of energy and transportation. These are crucial elements in determining the pricing of goods and services all around the world. Dearer oil can impinge upon inflation and thus influence the level of interest rates. Make no mistake, knowing what is likely to happen to the price of oil is crucially important in terms of judging economic activity and forecasting market trends.

The way in which the price of oil has been creeping up ought to send investors diving for cover. There have been a few mild shocks running through the confidence of the investing community but, overall, shares have remained remarkably steady. You could, of course, attribute part of the late September rally to book balancing at the quarter end. Even this has encouraging overtones, though. Fund managers must be concerned that they have too much cash in their portfolios if the underlying result is to push shares higher.

But we are in October now and history tells us this is altogether a trickier month. Overall, the signs are good. Bid activity continues with the Mexican move on our own RMC. This has stimulated speculation that a wholesale reshaping of the aggregates industry is about to take place. While the number of companies that might succumb to merger mania as a consequence is strictly limited, it is encouraging to think we might have some fun and games to look forward to.

The autumn started for me with a re-assessment of what the market wants from investment managers. Conducting an informal survey among those charged with taking our proposition into the IFA market, I was struck by how popular the multi-manager approach appeared. Be it fund of funds, manager of managers or whatever style was adopted, it seems as though there is a real appetite for this type of service This despite the fact that costs can be higher.

I am a serious fan of multi-manager. Indeed I once put together a paper to convince my colleagues of its virtues. Over the years, the offerings in this market have been refined, made more efficient and sophisticated and do generally now offer a wide range of alternatives, so much so that whole trade magazines are now devoted to this one segment of the market. There is an old saying that once everyone climbs onto the bandwagon, it is time to jump ship. In this case, the bandwagon seems set to roll for some time. Let&#39s face it, some form of multi-manager approach has always been the best option for those with limited resources, unable to diversify their investments in a cost-efficient way other than through collective investments and there is room for further improvement.

One remaining argument must be whether multi-manager can be used to provide investment solutions for larger portfolios – those of sufficient size to invest directly if they so wish. In the end, capability and resource will hold sway. Make no mistake, though, multi manager is here to stay and will widen its reach. This is an area of our marketplace in which I intend to take more interest as the nights draw in.


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