Failing grade for Australian multi-managers
Despite claims that multi-manager products will perform regardless of market conditions, Standard & Poor’s peer group review of Australian equity multi-managers has found they have struggled to meet their investment objectives over an extended period of time.
S&P awarded five investment strategies three stars and downgraded two others following the review, which covered four managers offering seven strategies.
According to S&P, it’s widely accepted that timing when to invest in growth or value style funds is a very difficult thing to do, as both perform differently through the market cycle.
That said, multi-manager products are designed to take this timing burden away from investors by “constructing funds using the best managers from each style persuasion”.
“Aggregating these portfolios should result in a fund that is typically style-neutral, but that aims to benefit from the superior stock-picking skills of the underlying mangers over time.”
Despite this, S&P’s ‘Australian Equity — multi-manager peer group — 1 Equities — Quant review’ found many multi-managers struggled to meet their investment objectives over extended periods.
The strategies awarded three stars included Russell’s Australian share and opportunities funds, MLC’s growth and value style strategies, and Customer Choice’s Australian share fund. S&P rated both Advance’s and MLC’s Australian share strategies two stars.
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
