Multi-manager funds, or fund of funds, are investments in a range of funds & fund managers, which aims to provide investors with a diverse & low risk portfolio.
What are multi-manager funds?
Multi-manager funds, otherwise known as fund of funds, are, in their simplest form, funds that invest in other funds instead of individual Stocks and Shares. Many investors will refer to these as a one-stop-shop fund where investment and technical decisions are outsourced to the experts.
How do they work?
In a sense, multi-manager funds can be likened to employing an experienced housebuilder/project manager to construct your house for you. They will search out the best sub-contractors and the best materials from top branded names, as well as smaller unknown names, and combine these all together.
In the same way that a bathroom would be put together, thoughtfully utilising a range of colours and textures, the management will also bear in mind how the funds would complement one another to produce the best results. By doing this it takes away all the stress of having to find, research and invest in the individual funds or stocks yourself. Moreover, it ensures that your portfolio has a suitable level of diversification.
The benefits of multi-manager funds
The aim of a multi-manager fund is to provide an additional layer of risk mitigation. In the same way that if a sub-contractor fails to perform or supplies used in the house are faulty, the responsibility is therefore borne by the project manager. They will have the knowledge and expertise to deal with this in the best way so to not affect the overall build. Investing in funds across a diverse range of assets classes, which have already conducted their own rigorous processes, creates a relatively low risk investment vehicle particularly suitable for investors with little financial know-how.
How much do they cost?
As expected, employing a multi-manager to do the work for you may cost a little more than seeking out managers by yourself. The average ongoing charge on a multi-manager fund is usually higher than that of a single manager due to the multiple layers of cost. However, if the fees are reasonable, you have a good chance of getting a satisfactory outcome over time. Much like if you find a builder willing to construct your house for a reasonable sum, you will get good value for money.
Finding the right multi-manager fund for you
We offer a range of multi-manager portfolios, each suitable for investors with varying appetites for risk. Our team continuously examine the broader trends in order to assess the risks the portfolios are exposed to. And by collaborating with some of the world’s best fund managers within their area of specialisation, we aim to seek out numerous opportunities in different areas of the market. Examining the numbers as well as conducting face-to-face interviews with these managers helps us to fully understand what we are investing in on behalf of you, the investor. To save time, keep things simple and reduce your investment risk, multi-manager funds are definitely a good starting point.
If you believe this is something that meets your investment needs please see our Ready-Made ISA range for more details.
Alternatively, if an ISA is not for you, view our multi-manager page to learn more about the fund range.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.