View more on these topics

‘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.”

Recommended

Bullivant to head IP working party

Personal Finance Society chairman Bob Bullivant will chair the income protection working party set up by Peter le Beau and Clive Waller. The income protection taskforce will include providers, reinsurers and intermediaries to promote public awareness of IP and to try turn round poor sales performance.

Burning the house down

Britannic’s Burns Night celebration wins the Diary’s occasional (that is, annual) prize for the most aggressively Scottish party held in England. This may not sound too challenging but the firm went so far as to employ an over-zealous actor to dress as Robert Burns and slash into a 3ft haggis with a knife longer than […]

The ones that got away

Nearly half of equity-release plans were sold direct by providers last year, highlighting a missed opportunity for advisers, says Nicola York

Prescient gets 1,000th client

IFA firm Prescient Financial Intelligence has gained its 1,000th client 16 months after its launch in August 2004. The firm has offices in Exeter, Glasgow, London and York specialises in Sipp and IHT solutions for small asset managers and discretionary fund managers.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com