A possible route to take in reducing the risk of making an inappropriate asset manager selection is choosing to invest in a portfolio comprised of several quality asset managers.
When considering our funds comparison, it stands out that this strategy yielded the highest returns over the ten-year period under consideration; over 35 percent higher than the strategy that came closest. In addition, it also posed the lowest investment risk.
But if choosing even a single asset manager can feel overwhelming, how do you go about choosing more than one? Well, this is exactly where a multi-manager may be of assistance to you or your financial intermediary.
A multi-manger evaluates individual asset managers and the funds they offer to structure multi-managed funds (each comprised of several different individual funds) that serve a range of investment needs. These multi-managers have the qualitative insight to differentiate between different asset mangers’ investment philosophies, to provide the most suitable combination of managers in meeting specific investment objectives and to correlate these managers’ performances in targeting the delivery of consistent returns.
So, even when backing a winning horse could unintentionally see you backing a one-trick pony, there is definite value in obtaining appropriate advice from an independent intermediary and picking the winning side — whether this means choosing a quality single manager or choosing a team of single managers in a multi-managed fund.
Nico Coetzee is Executive: Business Development at PPS Investments.