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Many happy returns

Credit Suisse Asset Management joint heads of multi-manager Gary Potter and Robert Burdett talk to Philip Scott about a decade of pioneering multi-manager investment

This year marks three anniversaries for the multi-manager team at Credit Suisse Asset Management.

Joint heads of multi-manager at the group Robert Burdett and Gary Potter have now been working together for a decade, having originally met at Rothschild Asset Management.

And, it was May 2005 when the pair and their team officially took control of the Artemis fund of funds that they acquired. Credit Suisse bought eight funds, four of which they merged.

But most significantly, on August 10, it will be five years since the fund firm set up its multi-manager offering, which originally comprised 11 funds.

Today, Potter, Burdett and team oversee the manage-ment of 16 fund of fund portfolios, which contain assets under management of 1.15bn. Together, the pair have 45 years’ experience in the industry, with Potter being the “old git”, with 25 years under his belt compared with Burdett’s mere 20 years.

Burdett and Potter are two of the best-known faces in the UK multi-manager arena but the pair have their work cut out these days after the dramatic growth of the fund of fund sector since 2001. Today, they can identify around 25 competitors but it was probably half that figure in 2001 and only around four to five in the mid-1990s.

Potter says: “Back in 1996, hardly any of the major investment groups had a multi-manager presence but since then we have seen such groups as Fidelity, Schroders, Gartmore and New Star join the market. Recent sales figures suggest that fund of funds is now one of the biggest-selling areas in the industry.”

Burdett continues: “It is a tacit endorsement that multi-manager has moved to being a mainstream solution that works, and thank god for that. We are lucky to have got there earlier than most.”

Potter diplomatically asserts that the CSMM team generally rate all their competitors.

He says “We appear to be one of those teams competing for Champions League honours in terms of the money take. There are only five clubs which have occupied the top quartile over the past five years in the Premiership and we aspire to be one of those.”

Right now, both admit that they are quite content with their lot, especially their two flagship portfolios – the CS multi-manager cautious and the constellation funds which together represent a sizeable chunk, at just under 500m of assets under management, of the company’s UK retail multi-manager business.

During the past three years to May 1, the cautious managed fund has posted a return of 54.4 per cent and is ranked fourth out of 39 portfolios in the IMA’s cautious managed sector.

The Constellation fund has delivered 90.6 per cent to investors and within the global growth category is ranked 29th out of 136 portfolios for the term.

Potter says: “Of the total assets we run, 90 per cent-plus of those assets are above average since launch and 75 per cent of those assets are top-quartile since launch so we have not got that many people who are unhappy.”

The portfolios that are niggling are Asia-Pacific and emerging markets but both funds have delivered positive returns over the past three years. The 9m Asia Pacific fund has posted a return of 104.5 per cent while the 8m emerging markets portfolio has achieved 132.8 per cent.

But in terms of sector ranking, the former is placed 51st out of 55 funds in the Asia-Pacific ex-Japan sector while the latter is ranked 21st out of 22 funds in the global emerging markets sector.

Potter, who oversees the two funds, says: “With the Asia and emerging markets’ portfolios we have had a tough time but they have been our best two absolute performers – the retail client has not complained. They have stabilised this year so those are the two areas where I would like to see a better relative peer-group ranking.”

Burdett adds: “We would love to have a 100 per cent top-quartile record but we have about six times the consistency of performance across the range. We are always striving to improve and we have made a number of changes to those two funds. It is a question of when you underperform, not if, and how you deal with that at the time and what you learn from it.”

The fact that the pair oversee running 16 products does not faze them and they claim they could double the number of products if it was required.

Potter says: “We do the research in the same way. They all feed off the same research platform, we review a sector every month – informally, it is more often than that.

“If someone came to us with a 100m mandate and asked if we could run a fund that was a third in Asia, a third Europe and a third Japan, we could do it tomorrow because we are doing the underlying research anyway. At Rothschild, we were running about 24 funds with half the resources in the team that we have now.”

Potter believes that their role is to find the funds of the future, “to invest in great track records when they are being created, rather than when they are being lived off”.

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