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IPE special report May 2018

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Multi-management trend still growing - Cerulli

EUROPE – Holdings in multi-management products fell in 2002, but the trend towards growth remains, says Boston-based asset management research and consulting firm Cerulli Associates.

Assets in funds of funds fell in the UK, France and Italy, according to Cerulli’s latest research. French funds of funds saw more than one billion euros in outflows during 2002. Complaints from investors “revolved around costs and returns”, says the report.

Italian funds of funds lost around 43 million euros, representing nearly 13% of the industry segment.

The UK funds of funds market reported assets under management of 13.3 billion euros from 16 billion euros the previous year, and lower even than in 1999, when AUM was 15.8 billion euros.

In Germany, however, fund-of-funds assets remained fairly steady. Assets under management in the sector fell to 26 billion euros from 26.4 billion euros at the end of 2001.

Multi-manager products, comprising manager of managers vehicles and funds of funds, may not have escaped the bear market, but the overall trends favouring growth in the industry remain firmly in place, says Cerulli.

“Multi-managers’ claims of risk diversification – whether cogent argument or siren song – appeal to investors of all stripes in today’s wobbly, war-tense markets,” explains the report.

For fund managers, the idea of ‘assembly’ rather than ‘manufacturing’ appears more attractive as they become increasingly unsure of generating top-performing products.

And on the distribution side, multi-management products have the upper hand over the “more expensive, less manageable avenue of full-open architecture distribution,” adds Cerulli.

Multi-manager products grew 15% a year between 1999 and 2001. Cerulli is estimating multi-management products worldwide to hold less than the 489 billion dollars they contained at year-end 2001. Exact figures will be released before July.

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