The latest fund sales report reveals that Credit Suisse attracted almost 20 times more money than Henderson and four times more money than Jupiter in the fourth quarter of 2003.
Anecdotal evidence had long suggested that Credit Suisse was way ahead of the pack but until the report was published – revealing for the first time sales of multi-manager funds – no evidence existed to support this contention.
But now the industry can see how the market is panning out and the results are surprising. Not only did Credit Suisse – which pulled in £117.8m in Q4 – trounce its fund group rivals, it also beat life companies with prodigious distribution capability such as Scottish Widows.
In fact, despite £98m of sales, Widows was also beaten by Skandia Investment Management, a new business which, with sales of £115m, was only narrowly pipped to the number one slot by Credit Suisse.
Credit Suisse attributes its success partly to the fact that it is – and has been for a long time – one of the most active multi-manager groups in terms of IFA relations.
Its two co-heads of multi-manager Robert Burdett and Gary Potter are often seen at roadshows and seminars explaining their process and how they can add value for IFAs looking to outsource their fund management responsibilities. Their performance, although somewhat shaky at first, has been consistently good while others have flagged on a more regular basis.
Combine this with Credit Suisse's crucial decision to scrap front-end loads temporarily on its multi-manager funds while still paying 1 per cent commission and the success it enjoyed at the end of last year does not seem so surprising.
But while its rivals acknowledge that Credit Suisse deserves credit for its performance and the clever timing of its pricing move, some argue that its tactics do little for the market as a whole.
Jupiter joint managing director Gordon Davidson says: “We have been watching Credit Suisse and it has done a good job with pricing. That is good for its own market share but it does not increase the overall size of the market which is what we are interested in.”
Jupiter pulled in £30.3m in Q4 and Davidson says the feedback that the firm has been getting suggests that IFAs are largely interested in only three fund of funds players – Jupiter, Credit Suisse and Edinburgh Portfolio, now New Star Portfolio. But although New Star Portfolio is believed to be pulling in a sizeable chunk of multi-manager money, New Star says it is unable to provide discrete sales figures so soon after it acquired the business.
In fact, a number of groups have declined to disclose their sales, with Isis among those pleading market sensitivity while Gartmore has only just completed transforming its fettered operation into an external Fof following its recruitment of Bambos Hambi and his team from Insight.
These omissions make it impossible to compare every provider but the report's top 10 makes interesting reading nonetheless, with Abbey, on £30.5m of sales, slightly ahead of both Jupiter and Legal & General, which pulled in £28m.
All are higher than Fidelity with £16m – not surprising, given that its offering is largely fettered – and Cazenove, which attracted £9m. Henderson props up the list with £6.8m, a pittance compared with the sales seen by Credit Suisse and Skandia.
Although Henderson – one of the original entrants into the fund of funds market – refuses to offer an explanation for this, IFAs believe its problem lies less with performance than with brand.
Hargreaves Lansdown sen-ior analyst Meera Patel says: “The name is just not very saleable at the moment. Skandia, Credit Suisse, even Isis – they are well respected brands but the Henderson name is putting John Husselbee, its head of multi-manager, at a disadvantage and £6m in three months when markets are doing well is not very good at all.”
Patel believes marketing is essential to the success of multi-manager funds, comparing HL's special situations fund, which has attracted just £18m since launch in April 2001, to Credit Suisse's similarly performing constellation fund, which has pulled in £100m since August 2001.
HL has not really marketed its fund but Credit Suisse has thrown its marketing might behind constellation which it says is attracting advisers which usually shun multi-manager.
It is a similar story with Widows, which has taken £540m into its multi-manager offering in two years, an impressive figure in today's climate (the top 10 collectively attracted slightly less than £500m in Q4). But as much of its sales have come through its branches, its experience is atypical of most multi-managers. There are net inflows into the sector but most of the sales detailed in the fund report have come from switches from rival providers.
Credit Suisse, with its special promotion in Q4, has done particularly well in this respect but it is not alone in targeting the disgruntled investors of its competitors, with Henderson in particular caught in the cross-sights.
An industry source says: “There is not a lot of new business around so the multi-managers are attacking Henderson because it has a lot of existing money and its relative performance has not been that strong of late. Most of the money is just going around in circulation.”
In the short term at least, the winners will be firms which woo their rivals' clients most effectively but this game will change once investors start ploughing into the multi-manager market which they undoubtedly will as soon as they begin trusting the stockmarket again. By that stage, however, it may be too late for those over which the vultures are already circling.