Retail research house Lonsec has given just two multimanagers its ‘highly recommended’ rating in the firm’s annual review of the multimanager sector.

Mercer and Russell received the top rating and nine other multimanagers received the second-highest ‘recommended rating’. They were: Advance, AMP, AXA, BT, Challenger, ipac, Optimix, MLC and Skandia/Intech. A total of 16 multimanager firms were rated this year, with three new entrants in the latest review – United Funds Management (part of Australian Wealth Management), ipac and Advance. The three main themes to emerge from the review, according to Lonsec analyst Deanne Fuller, were: . Managers increasingly adopting higher-alpha strategies, such as long/short and concentrated funds. . Differentiating beta through uncorrelated asset classes, such as private equity, emerging markets and property. . “Alpha retention” through better implementation of investment decisions. Fuller said that, generally, the early adopters of alternative or new asset classes with a low correlation to traditional investments had outperformed those which relied heavily on equity and bond managers. The dispersion between best and worst-performing multimanagers has blown out in the past year. Best performer in the 12 months just gone returned minus 4.8 per cent and the worst performer minus 10.6 per cent. In the past five years, the best performer returned 11.7 per cent a year and the worst performer 9.5 per cent.

Leave a comment