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MGM takes different WP angle

MGM Assurance believes a multi-manager approach could help restore confidence in the with-profits market.

The company applies a multi-manager approach to its unitised with-profits fund, the MGM bonus growth fund, and also runs a managed fund on the same basis. An internal investment committee makes asset allocation decisions each quarter and five external managers run different asset classes. These managers were chosen from a shortlist put together by Watson Wyatt.

Merrill Lynch manages cash and fixed interest, UBS runs global equities and UK tracker funds, Investec and Majedie are responsible for the actively managed UK mandate and Morley looks after the property content of the fund.

Unlike some multi-managers, MGM has only one manager for asset classes with smaller weightings while the biggest asset class – UK equities – is divided between several managers to diversify across investment styles.

Marketing manager Alan O’Neill says: “The problem has not been with-profits, it has been driven by problems with endowments. WP demand has gone down but I do not think all of that is justifiable on performance. Not all WP funds are going to deliver to investors in future years but you get bad funds in all sorts of areas.

“Some people say multi-manager is an alternative to with-profits but overall the multi-manager approach is beneficial to with-profits bec-ause it addresses how to get the best manager for each asset class. No one group is an expert and consistently produces the best returns.”

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