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Multi-manager view

The multi-manager sector is growing rapidly. It has seen large numbers of new entrants, a flurry of fund launches over the past few years and an ever-greater number of column inches devoted to it in the industry press.

None of these factors necessarily indicates that a particular trend will emerge as a long-term growth story but research among financial advisers indicates that multi-manager is genuinely here to stay, and is an ever-greater focus for many advisers’ businesses.

We saw strong evidence in research we carried out in the second half of last year, with 62 per cent of more than 2,000 respondents indicating that their business in managed investment solutions had increased over the last 12 months and an encouraging 69 per cent of advisers predicting that their use of multi-manager solutions will increase further in the future.

The last couple of weeks have seen the evidence strengthen again.

Last Friday, we completed a nationwide series of Skandia Pathfinder road shows where electronic voting enabled us – in classic “ask the audience” fashion – to gain instant feedback from 1,500 advisers. Of particular interest to us at Skandia Investment Management was the response to the question to what extent advisers saw their business moving to a product provider who will select fund managers on their behalf.

More than half said they would be outsourcing at least 40 per cent of all their new investment business. Thirty per cent of these said they would be delegating at least 60 per cent.

This is a massive shift in an industry in which many advisers have seen fund selection as a core part of their business for years. It is clear that the market really is changing. Multi-manager investing, viewed as being peripheral only a few years ago, is now one of the growth areas in the investment market.

A good example of the pace of growth has been Skandia Investment Management itself – launched as a strategic response to the growing multi-manager trend. It was established with seeding of £750m (scale being a vital element in being able to run multi-manager assets effectively) but in other respects was a start up operation, and has passed through £2bn in assets under management in less than two years. But I mention this less to plug the company, more to say that our success says much about the buoyant state of the multi-management world.

Many advisers are examining their business efficiency and have reached a crossroads – keep picking funds and accept the costs and the risks involved or outsource and solve the investment management headache – freeing up time to see new prospects and focus on the core strengths of client service and financial planning. The combination of investment and business benefits should ensure that the multi-manager sector continues to flourish.

David Orr is head of marketing at Skandia Investment Management

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