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Views from Jupiter's experts, to keep you up to date with our latest thinking. Insightful information for anyone who has investing and markets at the forefront of their minds.
Funds of funds - an outsourcing solution
Constructing and maintaining a selection of funds that is both suitable and offers performance potential for each client, can seem like an ineffective, time consuming task, made tougher by volatile market conditions and impending demands of RDR.
A fund of funds manager will undertake the extensive research involved in choosing and rebalancing an appropriate selection of funds, managing risk within specified parameters and selecting a range that the manager believes represent the 'best of the best' from across the market. Offering diversification across asset class, region and sector as well as the asset allocation, market timing and fund selection expertise that come with active management, a fund of funds could be an ideal core holding for many investors.
The number of funds of funds on the market has increased steadily along with advisers' demands for outsourced investment solutions. There are currently over 390 Unit Trusts/OEIC funds of funds available to UK advisers. However, few have a demonstrable long-term track record and only 5% of these have had the same manager over the last decade*. Reputation, track-record and experience can all be valuable indicators when searching for the right fund of funds.
The Jupiter Merlin Portfolios offer investors access to risk management and asset allocation as well as considered research, in part comprised of regular face-to face interviews with the fund managers with whom they invest. Not only would this level of expertise in assessing the macro-economic environment be difficult for most advisers to achieve, but the level of insight available at the fund level would be almost impossible to replicate. The team are able to gain regular insights from fund managers on the direction in which they see their portfolios heading in response to market conditions. In this way, the Jupiter Merlin Portfolios are regularly rebalanced and maintained, a level of responsiveness that could be invaluable, particularly during periods of market volatility.
*Source: IMA and Defaqto as at December 2011.
Past performance is no guide to the future. The value of an investment and the income from it can fall as well as rise, and may be affected by exchange rate variations. Your clients may get back less than they originally invested. Charges tend to be higher than for conventional unit trusts to allow for a portion of the charges applicable to underlying funds. On average this works out at around 0.9% of the net asset value per annum. Authorised and regulated by the Financial Services Authority.