Solus Investment Managers has created a multi-manager fund of funds, which invests in 14 funds from different management groups.
The Solus Multi-Manager Services balanced portfolio will diversify geographically, across fund management groups and asset classes. UK equities will dominate the portfolio at 50 per cent, while 23 per cent is invested in equities from other regions. The remainder goes into fixed interest and cash.
When constructing the portfolio, funds are initially screened without the fund manager knowing its name. This is designed to eliminate big brand bias when selecting funds.
The fund manager will look for funds that consistently outperform their benchmarks. He will interview the fund managers to find out how they manage their funds, then assess whether performance is likely to be sustained. Examples of initial holdings include Liontrust first large cap, Aberdeen sterling bond and DWS UK equity income.
Multi-manager funds are flavour of the month and the market is crowded. M&G recently linked up with Cazenove to offer three multi-manager funds of funds and last year Scottish Widows teamed up with experienced multi-manager Frank Russell. Credit Suisse Asset Management is also a key player in this market.
The advantage of the multi-manager approach for investors is that they can maximise diversity within a single fund and this may be useful in the present climate of volatility where investments need to be constantly reviewed.
In comparison with similar products, the Solus fund has a low minimum investment, so it could be accessible to more investors. It requires a lump sum of at least £500 or £40 a month, when M&G and Credit Suisse funds of funds both require a minimum investment of £1,000 for a lump sum or £100 a month.