With a combined nearly 70 years of investment experience, BMO Gam’s Garry Potter and Quilter Investor’s Bambos Hambi can only be described as two titans of the multi manager industry.
As such, last week’s announcement that Potter (pictured), co-head of multi-manager, will retire at the end of Q1 2022, while Hambi, chief investment officer of Quilter’s multi-asset business, will step down at the end of 2021, may leave investors questioning where to place their money.
“For the adviser world there aren’t really any new players in fund-of-funds to consider- BMO Gam and Jupiter are the stalwarts,” says Fairview Investing founder Ben Yearsley.
Traditional asset managers offering fund-of-fund products have thinned out over the years. Larger wealth managers have increasingly set up their own in-house solutions, following the retail distribution review (RDR) and rampant consolidation, says independent wealth expert Adrian Lowcock.
“These often don’t get the same high profile outside of the groups but are likely to grow as wealth managers look to offer their services to IFAs,” Lowcock says.
“In addition we have consolidation in the IFA space of the market and these consolidators look to ensure they have a strong investment proposition which includes in-house multi-manager funds.”
See also: Multi-manager trailblazer Gary Potter retires from fund management
Still a place for traditional fund-of-funds business
That said, Lowcock says there is still a place for more traditional fund solutions. “I wouldn’t underestimate Abrdn’s range of funds, they have the depth and range to offer investors a solution to suit their needs,” he says.
Then of course there is the Jupiter Merlin team, who have “proven their ability to analyse and select funds,” Lowcock notes. “While the team continues to be led by the experienced and highly regarded John Chatfeild Roberts, there is talent throughout the team such as Amanda Sillars and David Lewis amongst others.”
Fundcalibre managing director Darius McDermott highlights Premier Miton’s multi-asset team as another well-established outfit. He flags David Hambidge’s Premier Miton Multi-Asset Income fund as an “experienced alternative” for investors looking for something similar to BMO Gam’s and Quilter’s multi-manager funds, alongside Chatfeild Roberts’ £2bn Jupiter Merlin Balanced fund.
Hambidge was part of the original team that set up Premier Asset Management’s in 1995, long before it was acquired by Miton, and co-managers Ian Rees, Simon Evan-Cook and David Thornton have worked alongside him for over 15 years.
“The team make decisions centred around a three-stage process,” McDermott says. “The first step is asset allocation, where they discuss asset class valuations and macro issues. The second stage is fund selection, with the aim of having a final portfolio with a stable of funds that are not too closely correlated and the third stage is active management.”
McDermott continues to rate the BMO Gam Multi-Manager Navigator Distribution, which has maintained its Elite rating despite Potter’s imminent departure.
Investing up to 60% in equities and at least 30% in fixed income, non-equity and cash, the £542m fund targets a yield in the top 10% of income generators in the sector.
“While Potter will be a loss to the business, co-manager Burdett built three fund-of-fund franchises with him and has managed this fund since 2014,” says McDermott.
“We remain confident in Burdett and his eight-strong team at BMO, many of whom are senior partners in the business, and a number of whom have spent 15 or so years in the team,” he adds.
See also: Is Covid prompting a career rethink for fund managers?
Marlborough’s Macdonald and Sweeney ‘one to watch’
One multi-manager group Lowcock feels has gone “under the radar” is the team behind Threadneedle Managed. The five-fund range, run by Alex Lyle with other members of the team contributing to the day to day management, invests in in-house funds using a top-down approach.
“The team are well supported and have access to Threadneedle’s resources including their asset allocation team headed by Toby Nangle,” he adds.
He also highlights Marlborough’s multi-asset range as another “one to watch”. Sheldon Macdonald and Nathan Sweeney arrived at the boutique last month, bringing with them a decade of experience running multi-asset and multi-manager funds at Architas.
Yearsley likes Hawksmoor’s funds even though they do not fit the mould of traditional multi-asset funds, with the team frequently holding investment trusts.
Next generation of multi-managers
While there is still a handful of established fund-of-fund teams left, what about the next generation of multi-managers?
McDermott thinks the Wise Multi-Asset Growth fund fits the bill. Managed by Vincent Ropers since April 2017 and co-manager Philip Matthews since September 2018, the £83m fund is ranked first quartile in its peer group over one, three and five years.
Investing in around 30-60 underlying funds and investment trusts, with a preference for out-of-favour areas, McDermott notes that turnover of underlying funds in the portfolio tends to be very low.
“We like the team’s straightforward process and focus on managers with a simple, yet disciplined investment process,” he says.
He also rates two up and comers in the IA Mixed Investment 20-60% Shares sector – the Close Managed Income fund and Momentum Diversified Income fund.
The former fund, run by James Davies, Matthew Stansby and Sam Grant-Dolton, is a “steady offering” that invests in actively managed funds and ETFs and sits on the “conservative side of the risk spectrum, with preservation of capital a strong focus alongside income generation”.
The latter fund aims to produce a high level of regular income, with the prospect of preserving the real value of capital over the long term.
Co-managers Richard Parfect, Tom Delic, Mark Wright and Gary Moglione follow a value-style approach and have the flexibility to invest across all asset classes.
Over the last three years Close Managed Income has returned 18.2%, while Momentum Diversified Income has returned 28.7%. The average peer has returned 21.5% by comparison.
