Multi-Manager Funds
These allow investors to spread their money between different managers or different funds so that they can achieve greater diversification than if they had invested in just one fund.
Fund of funds:
- Fund of funds invest directly into funds managed by other managers.
- A fettered fund of funds only invests into funds run by the same management group.
- An unfettered fund of funds can invest into any fund.
Manager of manager funds:
- Appoints specialist managers to look after different parts of the portfolio to a particular brief.
- The overall manager will select the asset allocation for the fund.
- For each asset class a manager will be appointed to run that class.
Question - Use Your Note Taker To Jot Down Ideas / Calculations
1. If a fund of funds is described as ‘fettered’, what restriction is imposed on it?
a) Investment is restricted to only one asset class.
b) It may only invest in funds run by the same management group.
c) Investment is restricted to one geographical area.
d) It is subject to stricter oversight by the FCA.
B)
A fund of funds is a fund that invests in a range of other funds as opposed to securities. If a fund of
fund is fettered they only invest within funds run by the same management group (investment
house). If unfettered they may invest in any fund.
- Further study text reading: Pages 209-210