Multi Managerfunds Long Only Strategies for Managers and Investors

In Part 1, 'The growth of multi-manager investing', we consider the growth of multi-manager funds and the assets under management. In Chapter 1, Sohail Jaffer, the Lead Editor, introduces the multi-manager market-place, and describes some of the key issues that have driven its development including the different types of multi-manager long only products available, the shift towards open investment architecture, the positive impact of UCITS III Product directive in Europe and the benefits of pooling for the long term savings market segment. Benjamin Phillips from Cerulli Associates describes the evolution of the multi-manager industry in Chapter 2, illustrating its growth, and constraints. This is followed by Patrick Armstrong and Ana Cukic-Munro from Insight Investment, who describe in Chapter 3 multi-manager investment in Europe in the context of pressure on investors from non-traditional assets, hedge funds, and the benefits, and constraints of multiple-asset investment. In Chapter 4, Philippe Orgeval, from AXA draws some conclusions from the debate within the multi-manager universe - should investors proceed by the way of manager-of-manager, or fund-of-fund portfolios or indeed adopt a hybrid approach to multi-manager investing. In Part II, we consider the question of the additional value that multi-management can provide. Value for the additional layer of fees is the constant leitmotif in managed fund investment, and in this section of the book, we bring together a number of different perspectives. Shashank Kothare from Russell Investment Group opens the debate in Chapter 5 by enunciating the key benefits to investors of the multi-manager approach. Tony Earnshaw from Northern Trust continues the discussion in Chapter 6, elaborating on what is best practice for pension funds, how to ensure that they get the best from the philosophy of multi-management, how to find the specialists, and how to get the best from the fee structure. In Chapter 7, Patrick Armstrong and Ana Cukic-Munro from Insight Investment describe the performance of multi-manager funds, and how they can provide solutions, but also drawbacks, to investors. John Owen, from MLC, provides us with the Australian perspective in Chapter 8. He considers the benefits of a high-conviction strategy alternative in multi-manager investing, where the specialist managers are retained who include only their preferred stocks, without 'fillers' to balance the portfolio. This part concludes with a discussion from Ed Moisson at Lipper Fitzrovia, in Chapter 9, who discusses the total expense ratio of multi-manager funds now required by European regulators - how actually do fees impact on fund performance? Part III specifically concerns investors in multi-manager funds, both institutional investors and high net worth individuals. In Chapter 10 Andrew Slater at SEI considers the specific issues that institutional investors, including pension funds and insurers but also charities and foundations, need to consider, particularly in the light of pension deficits in the UK. Further, he addresses the issues of what are the institutional requirements for multi-management, and in what cases can they benefit from outsourcing investment management. In Chapter 11, Angus Duncan from Aon discusses the use of multi-manager funds specifically within unit-linked life and pensions products. In Chapter 12, Adrian Bramier-Jones from Fleming Family & Partners considers the specific investment issues affecting the decision to use multi-manager funds by family offices. Praveen Jagwani at Standard Chartered discusses investment issues for high net worth investors in Chapter 13, considering the issues that would drive high net worth investors to multi-manager investment. In Chapter 14, Steven Bleiberg and Legg Mason consider the behavioural biases of these individual investors, and why multi-managed funds provide some comforting solutions. In Part IV, we consider investment, management and operational issues from the perspective of the multi-manager fund manager. We begin with two chapters from Pierre Carras, who in Chapter 15, provides a comparison of the operational processes in manager-of-manager and funds-of-funds He follows this in Chapter 16 with a discussion on fund selection, and why selecting the right administrator is essential for a successful fund. Chapter 17, David Steiger and William Ramsay at EFG consider multi-manager investing from the perspective of a private bank, and discuss how to select the right fund and how to change funds. Paul Osborne at Bramdean describes liability-driven investment structures in Chapter 18 and using the liabilities of a pension scheme at the centre of an investment strategy to improve the risk profile of an investment scheme. He discusses the role of multi-managers within this. In Chapter 19, Robert Jaeger and Keith Stransky from EACM consider the use of multi-manager portfolios within a single asset class, and the potential to create a single portfolio with acceptable levels of tracking error against the index. In Part V, we consider specific issues of performance measurement and risk control. Tom Hoffman at Managers Investment Group considers the compelling issues of performance measurement in Chapter 20, discussing the impact of fees, the use of benchmarks, how to analyse different styles and the results of multi-manager funds next to the fund universe across a variety of fund classes. This is followed by Nancy Curtin at Fortune Asset Mangement who, in Chapter 21, discuses the due diligence process in manager selection and what are the strategies to be adopted to ensure effective risk control. Chapter 22, Marcus West at Aon discusses roles, responsibilities and interdependency of the main service partners within a manager of managers structure. Finally, in Chapter 23, Mathieu Gilbert from Rothschild discusses the issue of currency risk involved in multi-manager investing - the vast expansion of cross-border buying of funds, fund of fund managers are now subject to considerable foreign exchange risk. The final section of this book, Part VI, discusses the regulatory and taxation issues affecting investors, managers and trustees. We begin with two chapters from the lawyers, Dillon Eustace. In Chapter 24, Andrew Bates from that firm, discusses the compliance issues that affect the selection of managers, designing mandates, and due diligence checklists. Andrew follows this in Chapter 25 with a discussion of the regulatory framework applicable to manager of manager funds and funds of funds in the two largest European investment jurisdictions - Ireland and Luxembourg. In Chapter 26, Nicholas Harries from Macfarlanes discusses the regulatory issues affecting UK trustees. In Chapter 27, Daniel Martineau from Close Trustees considers the more general trustee issues. Finally, to close the book, in Chapter 28 Ali Kazimi from Ernst and Young looks at the taxation dimension to multi-manger investing.