UK - Multi-managers are tapping into the DC market and forging lucrative partnerships with the UK's biggest providers].
Invesco has teamed up with IO Investors to become the first DC provider to offer members access to manager-of-managers funds – eight in total.
Fidelity Investments is also to launch a manager-of-managers DC product – the Fund Partner Program. This will allow members to “blend” together funds managed by Fidelity Investments, Deutsche Asset Management, Barclays Global Investors and Isis Asset Management.
And Fidelity head of DC business development Tim Banks said that the DC provider wants to add third-party manager-of-managers funds to its DC line-up.
He said: “We need to do our own due diligence on MoM products before we decide who we would want to partner with, but its certainly on the agenda.”
Invesco chief executive David Butcher described the migration of multi-manager products in the DC market as the natural evolution of the investment strategy, which has already made its mark in the DB arena.
He said: “There’s no doubt that plan sponsors are looking for more choice going forward, that’s clearly the trend in DC.
“We’ve chosen to come up with a range of options because we want to continue to enrich our investment options range.
“As employers pass the risk on to employees, the MoM concept is the next step and that it should be offered to them. It’s a great idea for a lifestyle or default fund. Others will seek to imitate this.”
But Butcher’s view is not held by all DC providers.
Legal & General Investment Management head of DC services Ian Richards said it remains to be seen whether multi-manager products are cost-efficient.
He said: “It is an option that some trustees may feel has appeal, but what remains to be seen is whether their equity performance compensates for the higher charges.”
*Multi-manager products are growing at a rate of 15% per annum, Cerulli Associates claim.
The consultant estimates that the global manager-of-managers market is now worth anywhere up to £350bn. It was worth £305bn in January 2002.
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