Fundamentals changing among multi-managers

A fundamental change is occurring in the Australian multi-manager sector that will force established managers to alter their offerings or risk appearing outdated, according to ratings house Standard & Poor’s (S&P).

The ratings house this week released its Multi-Manager Sector Review and said that with many fund of fund managers selling or reducing their interest in the past couple of years, a changing of the guard was occurring.

Sector analyst Simon Scott said newer, younger managers that were fresh out of the trading rooms at the larger banks were managing money in new regions, strategies or asset classes and these were finding their way into multi-manager products now that new chief investment officers were taking the reins and updating product offerings.

“These funds are going to force the existing established managers in Australia to alter their offerings, whose structures or objectives now appear outdated,” Scott said.

Amongst the findings of the S&P review was that leveraged funds were offering particularly poor value for the fees being paid on a cost/reward basis and that products were increasingly trying to differentiate themselves, generally by fee structure or liquidity.