The benefits of a multi-manager investment approach

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This approach provides investors access to a broader range of investment expertise and specialist portfolio management skills, which can achieve more favourable, risk-adjusted outcomes.

There is an African proverb that says, “It takes a village to raise a child”, reminding us that for a child to grow into a well-rounded and successful adult, the whole community has a role to play in their growth and development. The basis of this concept is that a parent cannot realistically raise a child without the support, involvement, input, and advice of those in the community, which would include family members, friends, community and spiritual leaders, and role models.

A key function of a multi-manager is to research and analyse funds offered by various asset managers, both active and passive, to construct a portfolio that is aligned with a specific investment objective. In this regard, an investment mandate may be in respect of a pre-determined set of investment returns required by a client in order to achieve their goals or may take the form of a bespoke portfolio design constructed in accordance with a client’s assets and investment holdings.

In the absence of an appointed multi-manager, a financial advisor and client would need to meet on at least an annual basis to select underlying funds, make changes to asset allocation, and re-balance the portfolio. The drawback of this approach is that fund selection and asset allocation may become inappropriate as and when markets respond to global politics, natural disasters, or economic uncertainties, such as the Covid-19 pandemic, the war in Ukraine, and South Africa’s power crisis.

 

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