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Poor&#39s enters Fof market in link-up with Schroders

Ratings agency Standard & Poor&#39s is entering the multi-manager market through an exclusive agreement with Schroders to offer IFAs and financial institutions a global funds of funds service.

In a major departure from its core business, S&P is reass-essing funds that it has already rated to create a panel of recommended products for which Schroders will provide asset allocation, portfolio construction and performance measurement.

The funds will be available to IFAs, banks and other financial institutions though Schroders&#39 worldwide network of distributors, which can choose whether to market the service on a white-label basis or use the Schroders and S&P brands.

Both companies say the service, which will not be available in the US, has been developed to take advantage of the expanding global funds of funds market, which they expect to grow by 30 per cent a year over the next five years.

However, some fund managers question whether S&P&#39s desire to build a presence in this area could deter investment houses from paying it to have their funds rated.

Schroders director of fund of funds Robert Hegt says: “Increasing numbers of clients have asked for best of breed products but it would have cost us time and effort to build the research capability in house.”

S&P executive managing director Sanford Bragg says: “Investors have long relied on S&P&#39s fund research, analysis and advice for their portfolio decisions and we are delighted to now offer a customised value-added service that meets the needs of distributors.”

Jupiter joint managing director Steve Glynn says: “It does beg the question whether it will make it harder for investment companies to market funds on the basis of an S&P rating when they are not necessarily on its recommended panel.”

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