M&G has teamed up with Cazenove to enter the multi-manager market with three Oeic funds of funds.
Cazenove was chosen to manage the portfolios for M&G because of its track record in multi-manager portfolios. M&G says multi-management is a specialist skill and that it would not have worked if one of its existing fund managers was employed as a multi-manager.
One of the three funds, the UK growth portfolio, invests in a portfolio of between 12 and 17 UK equity funds, which include Artemis UK growth, Merrill Lynch UK dynamic and the institutional share class of New Star higher income. Although the M&G fund is benchmarked against the FTSE All Share index, the weightings of each fund within the portfolio will vary and the fund manager can increase or reduce the weightings as he sees fit.
When selecting funds for the portfolio, Cazenove's multi-manager team will initially screen funds to identify the consistent outperformers. The managers of these funds are then sent detailed questionnaires and are interviewed by the Cazenove team. Individual funds are then chosen for the portfolio on the basis of these interviews.
The fund could suit investors who want to invest in the UK stockmarket but who are unsure of which funds to choose. Multi-manager funds could be used to reduce the chances of making the wrong fund choices, since professionals are monitoring the portfolio at all times. However, this fund could be expensive as two layers of management are matched by two layers of charges.
According to Standard & Poor's, the M&G UK growth A fund is ranked 182 out of 247 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to February 3, 2003.