North marks its place on the evolving multi-manager map by proposing bespoke outsourced solutions to intermediary firms seeking to develop their own unique multi-manager proposition
Multi-manager is an investment discipline that is clearly taking centre stage within the UK investment community, evidenced by the increasing number of multi-manager providers and products coming to market. It isn't a new concept but it is one that has enjoyed a rapid rate of growth in the past few years and continues to gain momentum.
Recent research from Cerulli Associates claims that the retail multi-manager market within the UK grew from $21.7bn in 2001 to $49.4bn, in 2004. There is plenty of room for further growth still, as demonstrated by the continued boom in the US multi-manager market.
Providers of multi-manager products are very keen to point out the virtues of the concept to intermediaries; citing time pressures, regulatory issues, costs and resource amongst the many reasons an adviser should outsource investment management responsibilities to a professional.
But let's not forget that intermediaries were the earliest practitioners of multi-manager, creating diversified investment portfolios for their clients. The market has certainly becoming more sophisticated, as have the demands of clients, but intermediary firms have, to date, been able to successfully meet those increased demands. The regulatory environment places external pressures on intermediaries. No one can deny that.
What is more, the implementation of the new FSA COLL sourcebook will demand greater knowledge of the investment market. Why? Because fund managers adopting the COLL regulations will be able to utilise a whole new range of investment tools that were previously not available to them.
In other words, the market has become a great deal more sophisticated in one fell swoop. These new rules do not just apply to the single strategy investment fund but the entire investment fund market, including multi-manager. Before long the process of selecting an appropriate multi-manager will become an exhaustive one in itself.
Using multi-manager products and services as a form of outsourcing is not a new concept. Such activity has spawned many successful new providers over recent years and has freed up time for intermediary businesses to concentrate on their core activities. Why is it therefore that despite these arguments for using multi-manager, a number of intermediary firms wish to retain the investment management function?
The issue with using 'off the shelf' products to outsource investment management is that no matter how sophisticated they may be, they rarely meet the exact needs of the client. A certain degree of compromise is always required. There is the danger that you are trying to fit a square peg into a round hole. In addition there are key business considerations that are fundamental to many intermediaries firms:
• Control of their client relationships
• Control of their assets
• An ability to differentiate themselves
Using 'off the shelf' multi-manager products cannot address these considerations and cannot always meet the increasingly sophisticated needs of many intermediaries. At North, we believe that there are many intermediary firms who require a product that is tailored around their own investment philosophy. A multi-manager product that is unique to their business. For these particular intermediary businesses, we don't believe the answer is a product which means they surrender their own company brand and goodwill to that of a larger investment house. Nor do we think that another external business should have such close contact with their clients.
North
North is a specialist multi-manager investment boutique, set up to work in partnership with inter- mediary firms who want to find their own direction in the multi-manager marketplace; a direction that will address the specific needs of their clients and their own key business considerations. North understands the need of many intermediaries to protect their client base, their brand and their assets.
North is a firm launched in August this year by one of the most established names in the UK multi-manager market, John Husselbee. Having spent 15 years building two successful multi-manager businesses at Rothschild Asset Management and Henderson Global Investors, Husselbee has identified a niche in the market that is filled by only a few providers.
He says, "There is plenty of room in the multi-manager market to accommodate a new approach. North is operating in an area currently served by only a small number of specialist providers like Investment Management Selection (IMS). I believe that the 'off the shelf' approach to multi-manager will continue to work successfully for many intermediaries and will carry on attracting an increasing level of assets.
"However, I personally feel that the key to developing unique and exciting multi-manager solutions lies in working in partnership with our clients, the distributors, to build bespoke solutions to specific needs. At North our aim is to offer intermediary firms a cradle to all-encompassing service. We are a business that is built around a number of disciplines and we believe that we can make a significant contribution to the development of our clients' businesses."
Performance
Naturally a key motivator for any investment decision revolves around investment returns. Husselbee has an exemplary track record in fund selection, with a proven track record for consistent performance. This can be evidenced through the Neptune MultiManager Growth Fund and the Neptune MultiManager Income Fund. By combining John's expertise with the asset allocation skills of Robin Geffen, the Managing Director and Chief Investment Officer of Neptune, both funds have achieved top quartile performance in the Lipper Global Growth sector since Neptune took over management of the funds on 1 July 2004.* The numbers speak for themselves.
Flexibility
The clients' needs come first is not a platitude, but a mission statement at North. Husselbee says, "Our belief is that a successful multi-manager business revolves around meeting our client's needs and not simply shifting product. We are excited about the prospect of our clients taking multi-manager in completely new directions and look forward to working with them to develop unique and successful multi-manager businesses and products."
North is also able to offer product development services, marketing advice, legal and compliance guidance, ongoing servicing and even "stabling" for assets alongside the investment management services you would expect from a multi-manager company.
Independence
All unfettered multi-managers are independent; there is nothing new in that. But North does not operate directly in the retail market place and therefore can offer something many of the larger providers can not. North can offer a product that can only be accessed through their client and a brand that is designed not to compete but to endorse the client's.
The launch of North is a response to the increasing sophistication of many UK intermediary firms in managing their client's investments and in developing their own businesses.
Should you wish to find out more about North and how they might be able to help you in building successful proprietary multi-manager products or services please call John Husselbee or Rebecca Murphy on 020 7947 2837.
Source: Lipper. 1 July 2004 to 1 September 2005. All figures are bid to bid, net income reinvested in sterling. The Neptune MultiManager Growth Fund returned 34.0%. The Neptune MultiManager Income fund returned 26.4%. The Lipper Global Growth Sector returned 18.4%.
Key points
There are plenty of new directions to take multi-manager.
Off the shelf products do not meet the needs of all intermediaries.
North works in partnership with clients looking develop their own unique multi- manager propositions.
North aims to design and deliver multi-manager solutions that protect the intermediaries client base, their brand and their assets.
