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MGI won’t overload mandates

Mercer Global Investors says manager of managers is a such a scaleable strategy that it will never take between more than two to five managers to run a portfolio.

The company has recently unveiled plans to enter the UK retail market through a limited number of strategic partnerships with insurance companies.

However, it is not expecting to increase the number of managers on its mandates as they grow in size, claiming that this risks diluting returns.

MGI believes the right number of managers is dependent on the type of mandate and on market conditions, with a greater number of managers needed in volatile environments to diversify risk.

The company points out that some managers will underperform at times when market conditions do not suit their investment strategies but adds that it is important to understand the reasons behind the underperformance.

The company says the transparency of the manager of managers proposition makes it easier to understand the characteristics that lead to performance, so underperformance can be spotted at the early stages rather than waiting until investors feel the full impact.

Principal and head of business development, Europe, Amit Popat says: “Capacity is a big issue but as the funds increase in size, having more managers is not the answer. We think if there are too many managers, they will revert to the mean.”


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