Asset manager specialisation creates opportunities for multi-managers to deliver value

This year is likely to prove exciting for multi-managers inclined to exploit the opportunities presented by a fast-changing asset management industry.

Thats according to Raymond Berelowitz, CEO of top performing SYmmETRY Multi-Manager: With more and more talented investment professionals setting up their own businesses and the large houses, to a greater or lesser extent, responding by reshaping themselves into boutiques, the battle for talent and alpha is in full swing.

"Also interesting is that a number of new boutiques have closed to new business to preserve their flexibility, and hence their ability to generate alpha. These dynamics present multi-managers with additional opportunities to deliver value."

In the case of SYmmETRY Multi-manager, Berelowitz says the business is well placed to capitalise on new opportunities, not least because of its tried and tested process designed to "uncover great investment talent. Testimony to this are the three-year performance numbers that place our Aggressive, Balanced and Conservative funds first in their respective multi-manager categories."

In addition to manager selection, Berelowitz says experience in assessing and managing the risks associated with investing in boutiques, together with established relationships with managers to ensure access to capacity, will make the difference as multi-managers look to deliver for investors in the new environment.

The trend towards specialisation in the industry has seen investors move away from balanced mandates to specialist managers for each asset class.

Monene Watson, head of equity manager research at SYmmETRY, says: "These changes have led to a fundamental shift in the business models of asset management companies. Performance is key and increasingly popular performance fees mean that the manager accepts a lower base fee, but then participates in the out-performance, or alpha, above a certain level."

In terms of the value added by multi-managers, Watson comments that investing with smaller companies is all about investing with individuals. "One needs to ensure that the managers selected can deliver on expectations. Simply looking at past performance is not sufficient. Only thorough qualitative and quantitative work will help assess whether past performance is repeatable."