Do banks or wealth managers address the wide range of investment possibilities with extensive deep granularity? Or is it better to entrust your wealth to a dedicated professional multi-manager investment expert and invest like long-term institutional investors sticking to an overall asset allocation strategy following sub-strategies within a pooled investment?
Professional multi-manager experts have deep asset allocation knowledge and thoroughly analyse specialized investment managers. Such a selection process often eliminates the majority of online platform funds ostensibly launched for the retail investor.
Of course, there are downsides, like the often-cited skyrocketing fees, which were common in the past with the fund-of-hedge funds 2/20 model. However, today, pooling assets can lead to lower costs, and transactions within mutual funds occur at institutional prices.
Pooling Investments and Multi Manager solutions
If I buy a U.S. value fund today, and the market shifts to favor U.S. growth funds, I face typical retail transaction costs when switching between retail class units. With the multi-manager approach, asset allocation experts trigger such shifts. They focus more on minimising performance-reducing fees. The transaction happens at a low institutional ticket fee, shared among all unit holders.
As part of the financial industry, I have doubts, but I have followed the multi-manager approach for many years. I invest our long-term savings in multi-manager funds to gain exposure to top managers bypassing their usual multi-million minimum subscription. โMy multi-managerโ experts monitor investment risk daily, hedge specific short-term market shifts, and make sub-asset class reallocations. Diversification has always been a success factor when investing for the long term, and this comes naturally at a justifiable cost for before mentioned benefits.
Source: LinkedIn
