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Multi-managers forecast to take 30% of market

Single-manager funds face losing market share as increasing numbers of IFAs switch clients into multi-manager funds, claims Bates Investment Services.

Head of research James Dalby says investors are becoming disillusioned at the double whammy of poor fund performance and rapid manager turnover which has characterised the industry over the past three years.

He believes that IFAs, who have borne the brunt of investors&#39 frustration, will turn in greater numbers to multi-managers, which he says could take as much as 30 per cent of the market over the next few years.

His prediction comes despite recent research conducted for Money Marketing which reveals that many multi-managers continue to hit investors with annual charges approaching 3 per cent.

Dalby does not dispute that some firms are expensive but says many multi-managers have charges roughly comparable with single-manager providers, with the added attraction of being able to switch investments quickly.

He also points out that, unlike many smaller IFAs, multi-managers have the resources to monitor closely the performance and style of hundreds of fund managers.

Dalby&#39s comments follow the recent distribution deal struck by Bates with Skandia, which is launching a retail asset management group under the control of former Investec managing director Jamie MacLeod.

The IFA will recommend three Skandia multi-manager funds- the aggressive, balanced and cautious funds -in addition to those it already distributes for Axa Investment Managers.

Dalby says: “Groups which only offer single managed funds must be concerned about the threat that multi-manager poses to their share of retail fund sales.”

Threadneedle communications director Richard Eats says: “Whether multi-managers select our funds or whether IFAs do so directly does not really matter.”

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