GLOBAL - Multi-managers have admitted returns could dip because underlying managers had struggled to perform in the recent market conditions.
David Veal, head of institutional business development, Investment Solutions, said multi-managers had struggled with performance recently because active managers in general had found it difficult to add value during the recent market turmoil.
Antony John, CEO, IMS, added it was likely multi-managers would suffer in the current market conditions, but explained it depended on exposure to financial stocks and bias towards mid and small caps.
“We have had exposure to financial stocks but were less affected because of a tilt towards growth in large caps,” said John.
He added that from looking at performance across the industry there had been compression on returns and with the general market down, multi-managers needed to look at relative exposure.
Simon Ellis, managing director of Fidelity’s multi-manager business said it had avoided fixed interest managers which it believed were taking on too much risk with little extra yield by way of compensation.
Ellis explained that August was a particularly difficult month when stock markets plunged and investors sought safety in government bonds.
He said although not unprecedented, episodes like this were reasonably rare. But when they did occur, investors had a tendency to ignore market fundamentals and overreact through fear rather than rational thought.
“Diversification, which is the cornerstone of investing, seemed to go out of the window and affected all investors, not just those in the multi-manager space,” said Ellis.
Ellis explained that Fidelity was slightly behind its peers over the past couple of months, especially those who took on a more defensive short term stance.
“Once the long term fundamentals start to reassert themselves, we believe our funds will be well positioned to benefit,” added Ellis.
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