Multi manager performance outstripping conventional funds

The latest survey from Investment Life & Pensions Moneyfacts has revealed that multi manger funds are delivering superior long-term returns to conventional funds, despite the burden of higher charges.

The survey considered how multi manager funds have performed in both the long and short term relative to their conventional fund counterparts, within the five IMA sectors that contain the most multi manager funds.

Over one year, conditions have been challenging for all concerned, while the three year figures reveal multi manager funds tend to lag slightly behind conventional funds in the Balanced Managed, Global Growth and UK All Companies sectors.

However, over the longer terms of five and ten years, multi manager funds clearly come to the fore, comfortably outperforming their rivals in all sectors bar UK All Companies. The average Global Growth multi manager fund returns 73.1% over ten years, an impressive performance against the conventional fund average of 38.6%.

Over five years, the majority of multi manager funds sit within the top half of performers in each of their sectors. However, the ten-year returns are even more impressive, with the largest proportion of multi manager funds firmly ensconced in the upper quartiles of each of the sectors. Incredibly, almost 60% of Global Growth multi manager funds sit within the top quartile of the sector. In both the Balanced Managed and Cautious Managed sectors, around 40% of multi manager funds have posted top quartile performance, while one third of Active Managed multi manager funds also achieve this feat.

The chances of a fund delivering top quartile performance over the longer term appear to be improved considerably by opting for a multi manager fund instead of a single manager fund. Similarly, with a relatively small percentage of multi manager funds falling within the bottom quartile of their sectors, it suggests a degree of consistency is assured with regards to performance that may be worth paying a higher charge for.

Richard Eagling, Editor of Investment Life & Pensions Moneyfacts, said: "The relatively high charges that apply to multi manager funds result in the burden of having to deliver out of the ordinary returns. However, the latest evidence suggests that the multi manager approach overall delivers the goods. To the investor, multi managers' ability to reduce risk yet still offer the possibility of above average long term returns make the more expensive charges they usually attract worth paying."