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Moving target

Analysing the multi-manager universe this month reveals some clear trends, with absolute return and target return managers receiving a lot of attention.

As these managers are focused on positive returns, it is not surprising that these fund types have become more popular in the current investment environment where the appetite for risk has diminished significantly over the past 12 months.

These difficult conditions can be instructive as they provide greater insight into how such funds fare when markets are volatile and/or deteriorating.

To varying degrees, the funds that we have categorised as having an absolute return mindset or a target return objective have held up better than funds that are managed with a relative return objective.

Using data relating to May, June and July of this year, we are able to identify trends and see which multi-manager funds are being considered by advisers as client recommendations.

A multi-manager rating service was launched on our fund rating website at www.obsrfundratings.co.uk in March. The site provides information on 52 multi-manager funds which carry OBSR fund ratings. Fund factsheets, as well as other fund information, can be accessed via the site.

In the table above, I show the 10 most frequently downloaded factsheets for the quarter ended June.

All the funds featured in the table seek to generate returns through diversified portfolios and some managers use active or aggressive allocation strategies at the asset class and/or geographical level to do this.

Furthermore, all the funds, with the exception of New Star active portfolio and Credit Suisse multi-manager cautious managed portfolio, have a target return objective or are managed with an absolute return bias rather than a relative return bias.

What this means is that the managers tend to invest for the long term with an absolute or target return objective, rather than aiming to deliver attractive returns relative to a benchmark or peer group.

The Jupiter Merlin fund range continues to be popular, based on our download data. It has a strong brand in the market and has delivered attractive returns over the long term. We have high regard for its fund team which acknowledges its experience and long established process.

Whether interest in these funds will remain high when the appetite for risk returns is a subject of much discussion at the moment. Given that these managers typically aim to provide positive returns, however they seek to do this, we believe that there is an important role for these types of funds, irrespective of the current investing environment.

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