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In-depth. Informed. Independent.
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Money Marketing
Fund of Funds Invitational, Glasgow
Fund of Funds – The State of Play
Nigel WhittinghamDirectorOld Broad Street Research
25 June 2009
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Growth in assets under management over the past 5 years (March 2005 – March 2009)
Source: IMA
Percentage Growth
“External” Fund of Fund Assets 98%
Total Funds 23%
External Fund of Fund’s 4% of Total Funds
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How have they performed?
% of annualised compound return
IMA SectorAverage of OBSR Rated
Funds
Sector Average
Outperformance
Active Managed 4.75% (7) 3.70%
Balanced Managed
6.04% (6) 3.62%
Cautious Managed
4.82% (5) 2.14%
Global Growth 5.03% (5) 3.87%
Performance over 5 years (31.5.04 – 29.5.09)
Source: Hindsight
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Is the rationale for fund of funds still valid?
IFA investment needs
Source: Research for a major investment manager and a major life and pensions provider
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Is the rationale for fund of fund’s still valid?
Do they meet the needs of “new model advisers” and “wealth managers”?
– Move away from “product” to “service”
Do they offer enough risk profiles for clients looking for a “one stop” solution?
Do they still provide a solution to the regulatory challenge faced by advisers?
Stability of teams?
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The new competition
Risk based models (stochastic tools combined with guided architecture)?
Model portfolios?
Risk based OEICs plus risk assessment tool?
“New style” managed funds?
“Distributor influenced funds”?
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Different approaches and innovtion
UCITS III and NURS impact
OBSR categorisation basis
Asset allocation – Fixed or active
Return bias – Relative, absolute, target
Asset Allocation
Return bias
Relative Absolute Target
Fixed Traditional Innovation
Active Traditional Innovation Innovation Risk based models
F&C Lifestyle funds
Skandia
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Different approaches and innovation
Are they really funds of funds?
Percentage of assets invested in funds
From 27% to 100%
Copyright OBSR
In-depth. Informed. Independent.
In-depth. Informed. Independent.