In 2004, a contract was actually in the hands of the man – or woman – who was set to manage – or womanage – the assets with in-house expertise already in place through Bob Yerbury to make the asset allocation calls.
The rationale was that this kind of offering would help the group move away from its reliance on two large internal funds; it had a very narrow exposure to pretty much one asset class; its business also revolved around just one geography.
At the last minute the deal was shelved thanks to opposition from the investment side of the business – in truth, more than likely from that part of the business the group was trying to move its reliance away from.
So what has changed?
Asset concentration
Had the deal gone ahead back in 2004 and a multi-manager proposition launched nearly a decade ago, it is not inconceivable that today it would be up there with the likes of Jupiter in managing multi-billions in multi-assets.
Invesco Perpetual’s reputation has been built on Neil Woodford’s UK equity income funds and the bond strategies run by the two Pauls, Causer and Read. This is still the case, but as investors have looked for diversification then so has Invesco Perpetual.
There are now a number of talented fund managers running volume business, such as Stuart Parks (Asia), Paul Chesson (Japan) and Dean Newman (emerging markets, Latin America in particular).
Not that I’m quibbling about zeros as they run millions of pounds of assets between them, but the largest pool is still run by Neil Woodford and the external view of Invesco Perpetual is still heavily skewed towards him and his funds.
So from an asset concentration point of view, a multi-manager business makes sense.
RDR
Such a proposition will also fill a gaping hole in the group’s armoury, especially with RDR just around the corner.
If the level of investment outsourcing is as large as some predict, then those groups that can offer a truly unfettered multi-manager offering will be that much better placed then those running a more traditional fund range.
Back in the day, 90%+ of IFAs did business with Perpetual though the Invesco Perpetual group may not appeal to anywhere near as many. Its natural market place – £20bn in its income funds, £6bn in its corporate bond fund tells a story – is likely to get significantly smaller.
The same few (OK, four) funds have a significant IFA presence as they are already available on platforms, any number of buy lists from wealth managers and model portfolios aimed specifically at the intermediary market.
What they don’t have access to, however, is the revenue stream that these platforms, discretionary fund management propositions and model portfolios do.
Strategic view
One question to be debated still is how the proposition will be built.
Invesco Perpetual has the choice of buying an independent multi-manager business – purely as a matter of fact, MAM Funds is eight miles down the road – or buying in an experienced team from an established operation.
The former could add the possible complication of a private client business that is unlikely to be of much interest.
A third way is for it to continue on its current path of tweaking Permanent Portfolio Theory, a theory designed by Harry Browne in the 1980s that Invesco Perpetual has translated into investing equally across growth stocks, precious metals (gold), government bonds and Treasuries.
Reaction
The news has come as no great surprise to multi-asset investors I have spoken to, as in 2012 it seems like a ‘must have’ for a firm of the size of Invesco Perpetual. Alongside them, in terms of assets under management, sit M&G (whose global head of retail sales Jonathan Willcocks has said for a long while that he is happy with multi-asset fund strategy), Schroders (with its multi-manager team subsumed into its multi-asset business last year), BlackRock (and its multi-asset funds) and Fidelity (with its own multi-manager team).
In the meantime, the answer to the question is “Yes, it is a good idea, for the company as well as investors” – the really interesting thing will be to see what the new business looks like…and who they convince to run it.
What do you think about Invesco Perpetual’s proposed entry to the multi-manager business?
