UK - The Association for Institutional Multi-Manager Investing is carrying out research to dispel the "myth" that multi-manager funds have two layers of fees.
AIMMI chairman Steve Delo said that while the multi-manager approach had gained mainstream recognition, some consultants erroneously believed managers-of-managers charged clients twice – fees for themselves and their underlying managers – and were therefore more expensive than conventional funds.
But Delo said many compared MoM fund prices with balanced or standard equity fund prices. But he pointed out that as MoM funds had higher performance targets than both, they should be compared with other high performance vehicles.
AIMMI is carrying out research into MoM fees and conventional fund prices.
Delo claims that in an “apples with apples” comparison, MoM funds are not only fairly priced but, in many situations, are a far cheaper method for accessing active management and specialist managers.
He added: “We are annoyed that there is this mythology in the industry that there are two layers of fees. You even hear this from some consultants, who say in meetings ‘can you justify the extra fees charged?’.
“This is something that we need to knock on the head pretty soon before it becomes accepted wisdom.
“Small schemes get access to stuff they cannot afford and for large schemes, it is cost-effective because everything is aggregated and simplified.”
A buyout tool which provides schemes with up-to-date pricing and comparisons between insurers has been launched by JLT Employee Benefits.
The DB white paper sets out plans to review the funding regime, with 'prudent' and 'appropriate' possibly redefined. But James Phillips asks if this could this signal a return to an MFR-like approach?
The trustees of GKN's pension schemes have agreed a package of mitigation measures that would improve funding to a "more prudent level" if Melrose's offer is accepted by shareholders next week.
While the new powers are welcome, most respondents doubt it will make a difference to the outcomes for members, Pensions Buzz respondents say.