Dear Reader,
As the weekend starts I wanted to wax a bit lyrical about investment solutions. I spend a fair amount of time drilling down into fund structures to try and get an insight into investment strategy.
Today I thought we could dismantle the myth of multi asset being a great option for investment growth. I write this with the caveat that any form of investment is a better shot than just leaving it on the table or in a sock under the mattress.
In the world of IFA multi asset funds are used a lot as it gives clients access to a broad range of investments under one structure. Effectively you are getting diversification of risk all rolled up in one shiny container. The question is is this the best option for the savvy investor or should they be looking at more focussed fund choinces.
Multi asset managers basically use the pools of money to select a range of funds they perceive to offer a return metric and bundle them all together under broad investment categories like
Cautious
Moderate Growth
Balanced Portfolio
Growth
Super Fantastic Growth
They then will charge an annual management charge for this bundling. So effectively as a client you will be paying annual management charges for each individual fund held in the bundle plus the annual management charge for the multi asset manager. On top of that your IFA normally will propose that you pay a 1% annual service charge for them to manage your money.
Here are a few of the multi asset managers AMC's (annual management charge)
GAM 5% entry cost plus 1.6% AMC
IFSL Tilney 1.5%
Crikey.. that is a lot of percentage points to pay out before you even consider getting a return
