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Investors to shun index links and aim for target return deals

Multi-manager specialist FundQuest says target return products with reinforced protection are tipped for growth in the multi-asset sector.

Speaking at a FundQuest briefing last week, global chief executive Michel Anastassiades said investors are no longer content with a portfolio marginally outperforming a benchmark which is already negative and he predicted a shift away from index-linked products.

He said: “In terms of demand, the market will evolve towards non-benchmark products with reinforced protection of capital return.

“Investors are looking for portfolios that are not linked to indices. This is good, as it will give the manager a lot more autonomy in managing different asset classes, including cash.”

FundQuest has over £30bn assets under management and is the multi-manager operation of BNP Paribas Investment Partners, BNP Paribas’s asset management business. BNPIP bought London-based multi-manager IMS Group last April, helping it expand its presence in the UK market.

FundQuest is currently adopting a defensive approach across its equity portfolio and is underweight in all asset classes apart from cash.

Anastassiades said: “If we do not pick up the rebound in the first week then I do not care. It is a bet we do not want to take. Investors are looking for more capital protection so I would rather be safe and not lose our clients’ money.

“We try to be better than the average on the downside and on the upside we have an average performance. Multi-management will never be the best-performing fund in the world.”

In the event of a tie-up between BNP Paribas and stricken Belgium-Dutch financial group Fortis, Anastassiades said he would look to integrate its £10bn multi-manager offering into FundQuest.

He said: “Fortis has a pro- cess which is fairly similar to ours and I would not expect great problems merging it into FundQuest.”

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