Multi-Manager funds 'facing changing times'

Multi-Manager investment funds offered by private wealth managers and other firms might face major changes in future, according to latest Defaqto research.

The study, from principal consultant for investments Fraser Donaldson, suggests that there could be a general move away from actively managed funds to cash and other investment products.

These would include Exchange Traded Funds (ETFs), a relatively recent innovation from private banks and other firms which are similar to index trackers.

The principal factor behind the change was claimed to be the market downturn caused by the credit crunch.

Stock exchanges around the world have been hit hard by the crisis, damaging returns from investment funds.

’It has been taken for granted that part of a Multi-Manager’s job is to select the best ’active’ fund managers for their portfolios, but more recently we have seen an increase in the use of ETFs,’ Mr Donaldson commented.

’Fund managers are [also] more regularly upping the weighting of cash at the moment … While the use of cash is not a good or bad thing, it is an additional risk that the investor needs to be aware of.’ADNFCR-2318-ID-19178808-ADNFCR