Multi- manager View

In response to the after-math of World War I, British Prime Minister David Lloyd George was quoted as saying: “The economic mechanism of Europe is jammed”. Such a logjam of financial markets currently threatens to take hold if a credible solution to the current eurozone troubles is not forthcoming.

The pressure exerted on French yields (and even German yields to some extent) towards the end of 2011 marks a new, even more intense and acute phase of the European debt crisis. France’s recent downgrade from AAA provides further evidence that the problems have finally seeped through to the very core of the region, meaning that the stakes have been raised once again.

The future of the eurozone currency bloc is very finely balanced and its success, or rather its existence, relies on the political hot potato of greater fiscal integration.

Political and economic uncertainty surrounding matters of such global importance leads to extremely nervous investors. Choosing fund managers is difficult in any environment but the macro-driven world of today makes life even tougher. This environment has made life particularly difficult for investors and fund managers, who try to shut out all the market noise and focus solely on the merits and qualities of underlying companies.

Such uncertainty has pervaded investment markets for quite some time now and whilst a resumption to more fundamental, bottom-up investment is likely, exactly when this will be is not. However, via careful and skilful stock picking it has still been possible to generate strong returns via diligent bottom-up investing.

The end of a calendar year provides us with the perfect opportunity to review the fund universe’s overall perfor-mance. Particularly striking is that the difference between the best and worst-performing funds in 2011 was a staggering 75 per cent (Source: Lipper Hindsight, Jan 2012). Of course, this disparity of returns between funds is nothing new, yet it does serve to highlight the cost of getting it wrong when investors select funds.

Our resources are dedicated to finding future long-term top-performing funds and we work tirelessly in our quest to do so.

Furthermore, once chosen, our work has only just begun. In order to ensure that the funds remain at the top of their game, we continually monitor our selections and their peers using quantitative and qualitative methods which private investors simply do not have access to. At the slightest sign of weakness, we scrutinise our selections vigorously so as to determine whether the issue is merely a blip or something more funda-mental that requires action.

We strongly believe that the flexibility and constant monitoring of funds by multi-managers makes for a particularly interesting solution to the heightened uncertainty within markets at the moment.

Graham Duce is co-head of Aberdeen Multi-Manager