Multi asset management is a tall order

No sooner is one asset class flying then another is falling off a cliff

Asset managers who run investments in a wide range of asset classes run the risk of being jack of all trades, master of none, according to Katherine Garrett-Cox, chief executive of Alliance Trust. Multi-assset management is “a tall order”, she says.

“With multi-asset, no sooner is one asset class flying than another is falling off a cliff. It is a challenge to do well.”

Her recommendation is to find what you are good at and stick to that. “When you have something relatively straightforward, you can really shine and people know what you stand for.”

Her comments were in response to a question posed to the panel of which she was a part at the recent Fund Forum conference in Monaco about whether asset managers should launch asset allocation products.

Ms Garrett-Cox suggests the asset allocation part is something distributors should do. “If you add too much as a fund manager, you are not adding to value, you are detracting.” She does, however, think managers can make market timing decisions. The Alliance Trust, Britain’s biggest investment trust, raised 22.5 per cent cash at its peak last year before the market meltdown, and started to invest again in December, she says. By March, cash was down to 2 per cent.

Investment trusts can provide the sort of money management people want, Ms Garrett-Coc reckons, pointing to a 42-year record of rising dividends.

The question of who should make asset allocation decisions for investors is one that is rarely answered satisfactorily. Fund managers often claim they have to stick to their mandate and can’t even make market timing decisions to save investors from losses. Distibutors put packages together, but often stick to manager selection rather than asset class selection. Financial advisers mostly sell products, and it is only wealth managers looking after rich people who add the asset allocation view.

Which part of the industry is best placed to provide this all-important service for investors?

About the blog

FTfm is no longer updated but it remains open as an archive.

FTfm's specialist writing team offer their insights into the global fund management industry.

About the authors

Pauline Skypala has been editor of FTfm for four years having previously been deputy personal finance editor. She joined the FT in 1999 and has been writing on savings and investment issues throughout her career.

Steve Johnson, FTfm deputy editor, has been a journalist for 17 years, 10 of which have been with the FT.

Sophia Grene, reporter on FTfm, has been a financial journalist in print and online for 12 years.

Ruth Sullivan has worked as a financial/business journalist and foreign correspondent and for the past 10 years has been at the FT.