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‘Multi-managers too rigid on price’

Chatfeild-Roberts says there are too many makeweight funds in portfolios

The majority of multi-managers pay too much attention to price and too little to the quality of the funds they are investing in, according to Jupiter head of multi-manager John Chatfeild-Roberts

In his new book, Fundology, Chatfeild-Roberts says that while fund of funds managers aim to invest with the best managers, they often exclude themselves from the top performers by setting too rigid a limit on the price they will pay for a fund. He says this often results in them having too many makeweight funds in their portfolio.

He says: “Some people look at price too much and do not worry about whether that ref-lects the opportunity for outperformance. For example, if you could get Anthony Bolton’s special situation at 0.95 per cent but your cut-off point was 0.5 per cent, it would be worth paying the extra but some managers never consider this when they build their portfolios.”

F&C director (head of communications & strategy) Jason Hollands says he is not convinced that this practice is rife.

He says: “It sounds like a bit of a sweeping statement and it would not apply to F&C. I am not sure how many multi-managers it would apply to. You should not exclude a fund if the charges are higher as if it outperforms, it would be silly to ignore it. But if you can negotiate to keep costs as low as possible, it does have a positive impact on performance.”

Miton Optimal fund man-ager Sam Liddle says: “I couldnot agree more with John. If you buy a fund that outperforms, it is worth paying the extra for it. That is what you are buying – performance. The fact that you buy at a more expensive price should be irrelevant as long as you are adding that value and compensating for the cost.

“We obviously try to get the best terms that we can but there is no point in paying as little as possible for a fund that underachieves.”


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