Standard Life Investments has added three multi-manager fund links to its revamped capital investment bond.
The bond now provides access to UK equity, balanced and cautious manager-of-manager life funds.
Management of all three funds has been outsourced to US-based investment consultant Wilshire Associates, which has more than 22 years' experience running manager-of-manager portfolios for pension funds such as Black & Decker and Siemens.
Wilshire has created seven underlying asset class portfolios for Standard including UK equities, US equities and global bonds. Each portfolio is divided between two and four managers.
The UK equity fund will invest entirely in the UK equity mandate managed by Baillie Gifford, Newton, SVM and AllianceBernstein. The managed funds will invest in a combination of the underlying asset class portfolios, plus property and cash managed by Standard.
Wilshire maintains a database of managers and their existing funds, from which 800 meetings a year are conducted. Managers and funds are scored separately as the people and investment processes may vary from fund to fund.
Past performance is a contributing factor but stability of the management team is regarded as more important because Wilshire looks for managers best placed to perform well in the future.
Once a short list is made, the underlying managers are selected, constantly reviewed and replaced if necessary.
Standard investment director Chris Arnott says five manager-of-manager funds are offered on Standard's retail pensions, including an overseas equity fund. This fund will not be offered on the capital investment bond as Standard believes it will not attract much money through the bond wrapper.
Arnott says: “We wanted to provide manager of managers rather than fund of funds because manager of managers allows us to see every deal made by the fund manager on a daily basis. Segregated mandates give us more investment control. With funds of funds which invest in existing funds, we would have no control over the manager's use of benchmark.”