| Fund companies line up to get a slice of €1 bn market |
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| MM Asset Management, the UK multi-manager, is the latest firm to offer multi-manager funds to Irish pension and institutional clients. Multi manager schemes allow investment managers allocate parts of a portfolio to other managers while taking responsibility for asset allocation and manager selection. |
Irish pension funds and institutional investors are increasingly turning to multi-manager funds to boost returns, and to meet this growing demand, investment management firms are following the worldwide trend of offering multi-manager products.
Multi-manager describes the process where an investment manager allocates certain parts (or all) of a portfolio to other managers while taking responsibility for asset allocation and fund manager selection. The multi-manager approach to investment is currently one of the fastest growing areas of the asset management industry, and has been gaining considerable momentum amongst pension fund trustees worldwide. According to a recent Cerulli report, global multi manager products are expected to grow from $463 billion at end of 2002 to $770 billion at end of 2007.
Last year KBC Asset Management (KBCAM) signed an agreement with Northern Trust to create a jointly-managed manager of managers (MoM) pension product. KBC AM estimates that inflows into multi-manager products within the Irish marketplace will be in excess of €1 billion by 2007. KBCAM’s product incorporates Northern Trust’s international equity programme, and KBCAM’s bond, Irish equity and property management capability. Other firms offering multi-manager products include Davy Stockbrokers, which has a partnership with the Russell Company, and Merrill Lynch, which offers its ‘Global Selects’ fund to Irish based clients. MM Asset Management is a specialist UK based multi-manager firm, with between ?6-700 million in assets under management, and having been successful with its investment approach in the UK, the firm is now targeting Irish pension funds. Apart from an obvious desire to do business in his home country, co-chief executive Derrick Dunne believes that Ireland offers a lot of opportunity for the company, and it plans to open an office in Dublin shortly.
According to Dunne, ‘MM’s approach harnesses the expertise of specialist managers (from throughout the world) and combines them to produce funds structured to outperform within a disciplined, risk controlled framework, and is based on the premise that no single investment management firm is likely to consistently produce superior performance in all asset classes over time’.
The firm uses 13 managers, including Irish Life Investment Managers, which manages a Eurozone bond (passive) fund. Other managers include William Blair which manages the US equity allocation, and Baillie Gifford, which manages a UK equity portion.
MM’s clients range from start up defined contribution schemes to much larger defined benefit schemes, and include Wolters Kluwer, McCain and CCL Industries Inc. The legal minimum limit on MM’s funds is €125,000. |
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| Article appeared in the February 2005 issue.
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