• Financial strength and track record of the provider offering the funds - big is not always good and some smaller offerings can make huge impact on the success of a portfolio and IFAs need to be aware of the opportunities that do exist. Ruffer is a perfect example of this.
A growing influence in the advised investment space is that of fund risk-rating. Historically I have viewed fund risk ratings as being next to useless. What value a few stars mean when they are handed out by paying the rating agency escapes me? Today things are more helpful, with some of the highly respected fund analysis and research houses applying risk ratings to funds and putting some helpful words around this to position them more usefully for the IFAs to consider. However I still do not believe that this makes a jot of difference to a client whose primary concern is that their adviser knows what he or she is doing, has the client’s best interest at heart and creates and reviews an appropriately designed investment portfolio for them.
For those clients with limited resources or wishing only to dip their toes into the market for example a new Isa client, lump-sum or regular saver then a well-chosen multi-manager choice will be a good fit in terms of providing spread of risk and diversification opportunity.
Where an IFA business follows a well thought out and rigorous investment selection process it is possible to incorporate some multi-manager funds within client portfolios. Having said that, I maintain that the high ground in advised investment business will remain with those IFAs who have and can demonstrate a robust and specialist approach and market advantage will still be derived from fund picking and asset allocation in-house. If the USP for an investment-oriented IFA business is not their research and fund picking then what is it going to be I wonder?
Nick McBreen is an IFA at Worldwide Financial Planning
