UK - Fund managers have confirmed that some are raising minimum thresholds for segregated mandates, but deny the practice is widespread.
Their admission follows a recent report that Aon Consulting found leading fund management firms which would have accepted segregated mandates of around £20m five years ago are now looking for a minimum of £40m-£50m.
Henderson Global Investors director of institutional marketing Michael Shaw said the minimum fees of most fund managers made segregated mandates below £50m too expensive compared to the option of joining a pooled fund.
He said that in the past few years some fund management houses had cut fees to gain business, but falling investment returns meant they could no longer offer such deals.
Barclays Global Investors managing director of UK institutional business Miles O’Connor said that even if some managers were raising their thresholds, small segregated mandates were still the mainstay of smaller fund management firms’ “boutiques”.
State Street Global Advisors marketing director Kanesh Lakhani said that often a manager’s investment strategies were a decisive factor in deciding the minimum size of segregated mandates.
He said: “If you want to make your portfolio more diversified, you need a bigger size. Otherwise you end up holding fewer stocks and therefore more concentrated positions.”
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