With a combined nearly 70 years of investment experience, BMO GAM’s Garry Potter and Quilter Investor’s Bambos Hambi can only be described as two titans of the multi manager industry.
As such, last week’s announcement that Potter, co-head of multi-manager, will retire at the end of Q1 2022; while Hambi, chief investment officer of Quilter’s multi-asset business, will step down at the end of 2021, may leave investors questioning where to place their money.
To address these concerns, Darius McDermott, managing director of FundCalibre, has picked out three rising stars in the multi-manager universe, and three peers of Potter and Hambi.
The rising stars
The first fund McDermott has chosen is the Close Managed Income, which has been managed by James Davies, Matthew Stansby and Sam Grant-Dalton since November 2014.
“This is a steady offering which invests in both actively managed funds and exchange traded funds,” said McDermott. “It sits on the conservative side of the risk spectrum, with preservation of capital a strong focus alongside income generation.”
McDermott added that the trio of co-managers use the “plentiful resources” at their disposal from the wider group at Close Brothers to build their asset allocation.
“The fund is designed to be consistent in every way and this has fed through to performance,” he said.
According to data from FE Analytics, the £122m ($164m, €145m) fund is ranked second quartile in the IA Mixed Investment 20-60% Shares sector over one year, and is third quartile over three and five years.
Sitting in the IA Flexible sector, meaning the manager is afforded a significant degree of discretion over asset allocation, is McDermott’s second rising star, the TB Wise Multi-Asset Growth fund.
Managed by Vincent Ropers since April 2017 and co-manager Philip Matthews since September 2018, the £83m fund is ranked first quartile in its peer group over one, three and five years.
Investing in around 30-60 underlying funds and investment trusts, with a preference for out-of-favour areas, McDermott noted that turnover of underlying funds in the portfolio tends to be very low.
“We like the team’s straightforward process and focus on managers with a simple, yet disciplined investment process,” he said.
Aiming to produce a high level of regular income, with the prospect of preserving the real value of capital over the long term, is McDermott’s third pick, the £176m VT Momentum Diversified Income fund.
Also sitting in the IA Mixed Investment 20-60% Shares sector, the monthly income paying fund has generated first quartile performance over one, three and five years, using what McDermott calls a common-sense investment process.
“The managers, who adopt a value-focussed style, have the flexibility to invest across all asset classes,” he said. “Richard Parfect is the longest standing co-manager having the fund since July 2010. He was joined by co-managers Tom Delic and Mark Wright in June 2011 and Gary Moglione in April 2018.”
Peer group possibilities
But if investors are looking to replace like-for-like, McDermott noted Premier Miton’s experience dates back to 1995, when it established its funds-of-funds business with the launch of the Premier Multi-Asset Distribution fund under the leadership of David Hambidge.
In 2009, the group launched the Premier Miton-Asst Monthly Income, which Hambidge co-manages with Ian Rees, Simon Evan-Cook and David Thornton.
“The team make decisions centred around a three-stage process,” McDermott said. “The first step is asset allocation, where they discuss asset class valuations and macro issues. The second stage is fund selection, with the aim of having a final portfolio with a stable of funds that are not too closely correlated and the third stage is active management.”
McDermott’s second pick for an experienced alternative to Potter and Hambi is the £2bn Jupiter Merlin Balanced fund.
John Chatfeild-Roberts, another titan of the multi-manager industry, has headed up the Jupiter’s Merlin range since 2002. Since that time he has been joined by co managers Algy Smith-Maxwell, Amanda Sillars, David Lewis, Alastair Irvine and George Fox.
“These funds, which have different investment objectives, are predominately funds-of-funds, managed by a very experienced team of multi-manager professionals,” he said. “As the investment philosophy and style is broadly the same across the Merlin range, there are many holdings that overlap.
“However, the exposure is tailored in each fund to reflect the different investment objectives and risk tolerance.”
While noting that Potter will be a loss to BMO GAM, faith in his long-term colleage Rob Burdett means his last pick is the BMO MM Navigator Distribution fund the duo managed together.
Investing up to 60% in equities and at least 30% in fixed income, non-equity and cash, the £542m fund targets a yield in the top 10% of income generators in the sector.
“While Potter will be a loss to the business, co-manager Burdett built three fund-of-fund franchises with him and has managed this fund since 2014,” said McDermott.
“We remain confident in Burdett and his eight-strong team at BMO, many of whom are senior partners in the business, and a number of whom have spent 15 or so years in the team,” he added. “The fund remains Elite rated.”