YOUR PORTFOLIO
/ MULTI-MANAGER TRUSTS /
MULTI-COLOURED ONE-STOP SHOP
Sam Shaw takes a closer-look at the wide variety of multi-manager
trusts available in the closed-ended space
M
ULTI-MANAGER
PRODUCTS COME
IN ALL SHAPES
AND SIZES. When
applied to the closed-
ended space, the scope broadens
even further: funds of investment
trusts, investment trusts of
investment trusts or private
equity, trusts investing in
collectives and direct
investments, and multi-managers
running segregated mandates.
Many benefits of the traditional
open-ended multi-manager
sector – namely diversification
through a single holding (the
“one-stop shop”) and outsourcing
the portfolio construction – still
apply, but other characteristics
also come into play.
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For example, funds of trusts
have to cope with heightened
governance where the
overarching vehicle is itself
closed-ended. Open-ended
managers tend to have more
of a “free rein” in not having to
report to a board every quarter
– notwithstanding internal and
external legal and compliance
stipulations.
SECURITY CHARACTERISTICS
Senior analyst at Hargreaves
Lansdown Laith Khalaf says
that in his experience, multi-
manager investors tend to place
greater emphasis on “security”
characteristics: these are often
high net-worth clients who prefer
to hold a couple of multi-manager
funds rather than construct their
own diverse portfolio.
Yet he says this theory is
contradicted somewhat when
multi-manager funds are made up
of investment trusts, which are
often regarded as more volatile.
“When you bring in trusts –
because of the discount/premium
– you are bringing risk back in
because in rising markets you are
going to do better, the discounts
will close and the trust will
move to a premium. The flipside
happens when markets fall. You
then have to consider gearing,
which ampli