It’s only two short years ago that a stir was caused by a UK pension scheme holding an all multi-manager beauty parade. Here, for the first time in the UK, was a trustee body who had made the decision to use a manager of managers, and then set about finding the right one, rather than merely including a manager of managers, if at all, as a novelty item among the more mainstream houses. Today, this approach is increasingly common. So what has happened?
Shortly after that fateful day, a report was published by the Financial Times using research carried out by MBA students at Westminster Business School. This research showed that trustees tended to favour the idea of a manager of managers approach but typically, had never heard of the idea until asked about it for the purposes of this research. It was at the launch of this report that the concept of an industry body for the multi-managers was born.
This concept was simple. The small number of organisations running manager of manager programmes had an approach and skill set which could be of great benefit to trustees but it needed to be communicated. The growth of this class of business would benefit all the organisations involved, who could then compete with each other for the individual appointments.
The Association for Multi Manager Investing (AMMI) was born, a loose and informal organisation intended to raise the profile, to educate and train, to lobby where appropriate, and to agree on the future of the association. AMMI met with some success. Articles appeared in the press, a submission to the Myners committee was agreed and interest was stirred up. Other factors have helped change the climate, but AMMI’s presence and profile has certainly helped us to move to a position where the manager of manager approach is routinely considered as a serious option for trustees.
In the meantime, the association has changed. The informal talking shop was a good initial model but it had a limited shelf life as it became evident that the association needed focus, common aims and some mechanism for filtering potential members and agreeing projects.
Hence, the decision to launch AIMMI – the Association for Institutional Multi Manager Investing. The insertion of ‘institutional’ is significant. The metamorphosis into AIMMI has been spearheaded by Northern Trust, Attica and Escher – all committed to the institutional market. Now the new association is open for membership and it is from the ranks of the other institutional players that those members will come. Institutional players are interested in education, training and profile raising for one market place and retail players for another. It is not unlikely that an equivalent retail association may spring up to address the needs of a different sector of the market.
The differences between AMMI and AIMMI go beyond that. AIMMI is a limited company with aims and objectives and with membership criteria. With a minimum of formality, it is a proper organisation; AMMI refocused and came of age. It is also an association of professionals with a concern to build the multi manager share of the market while at the same time maintain standards. Robust selection processes and rigorous monitoring are the hall mark of the manager of managers and there is a desire to inform trustees that this is what they are choosing when they opt for this approach.
The different organisations involved have their own unique styles and approaches: emphasising and stressing different aspects of the process; differing over the role of quant and insight; individual and house; and the extent to which an asset class should be broken down etc. But each is committed to the central philosophy and each is willing to continue promoting these ideals.
Members of AIMMI will need to be involved in the institutional market place and will need to be running programmes which blend managers with different approaches and skill sets and, importantly, must be involved in due diligence, analysis and ongoing monitoring. This is about managing managers, not about open architecture. In order to focus, AIMMI will concentrate on the UK market in the short term.
AIMMI has plans for the future which include seminars, newsletters, a website and a commitment to growing the use of the manager of managers approach by explaining what it is and its advantages and benefits.
In the meantime, one major consultancy has espoused the approach for consideration by all smaller and mid-sized clients, another has announced the formation of a multi manager service and a range of other initiatives have contributed to a changing landscape. One way or another, the multi manager approach is set to be a major force in the future and the AIMMI members will be there to promote understanding, aid debate and set standards.

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