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  • Welcome to the Morningstar series, "Ask the Expert." I'm Holly Black. With me in the studio

  • is Rob Burdett. He heads up the BMO Multi-Manager range.

  • Welcome to the studio. Thank you.

  • What is a multi-manager fund I think is our first question?

  • So, it's, if you like, a gift-wrapped solution for portfolio management, all-in-one fund

  • which has certain amount of diversification and some tax benefits as well.

  • So, why would someone choose a multi-manager fund and let you do that for them rather than

  • choosing their own funds? Either because they don't feel equipped to

  • do it themselves or maybe in our market there's largely financial advisers and they are concentrating

  • on the holistic advice piece and they want an outsourced solution. And there's very few

  • solutions that are genuine representations of their whole of market independence and

  • multi-manager is one of the ones that definitely is.

  • So, when you pick a multi-manager fund, presumably you still get options as to what you want

  • to focus in on? Yes. We offer 10 funds in two ranges, a risk-targeted

  • range and a more sort of free style more performance-led range as well.

  • So, choosing funds is really difficult because there are tens of thousands pretty much. So,

  • how do you whittle that down? I think what we don't do is the silo approach.

  • I think that is just making your job easier and cutting out some great potential investments.

  • So, I think you have to have an open mind, you have to have a range of idea generation

  • sources and you have to have a process and together thenso we do look at performance

  • filters, but we happily look at brand new funds as well which don't have any historic

  • track record. We have ways of doing that essentially because our process is qualitative. So, it's

  • about understanding what the fund manager is trying to achieve, checking how they are

  • going to do it and then deciding if that makes sense.

  • So, what does it got to take to get someone into the fund?

  • So, we receive their portfolios and analyse them what they are doing through software.

  • We send out questionnaires to get them to tell us what they do and how they do it. Some

  • questions we leave to the meeting. They are much better off face to face, things like

  • about team, how they work together and remuneration. You never get a good answer in writing. We're

  • looking for an element of interest there. So, then we obviously look at performance

  • if it's available. But this is all really due diligence, if you like. We can't – we

  • haven't made any decisions yet. So, the decisions are made on a scoring metrics. So, we use

  • we score 16 qualitative decisions. So, that's when we prove to ourselves what we

  • like and dislike and if it's good enough for us.

  • And within the team does one of you have the power of veto or do you have to agree?

  • Yeah. So, myself and Gary are the co-heads of the business and we technically have to

  • for regulatory reasonshave the right to veto. We've used it twice on partial additions

  • to existing holdings. So, we haven't been draconian. We've got a great team of 10 and

  • they are all involved in driving the portfolios. And once a fund is in the portfolio, how do

  • you review that and what would it take for it to get kicked out?

  • eah. So, we're looking at performance daily; we're looking at the portfolios monthly. We

  • look at our squads every six weeks. Every six months minimum we'll meet all of the managers.

  • So, there's like a schedule of meetings. And yeah, outside of that, we'll happily go to

  • conferences or we'll look at research, people like yourselves and there's a whole range

  • of things that we do to keep us busy. These are 10 people with 200 hundred years' experience

  • looking after about 100 holdings. And how many of those two hundred years are

  • yours? (Laughs)

  • So, something that I think is commonly said about multi-manager funds is they do tend

  • to be a bit more expensive than relative other options. What would you say to that?

  • I thinkso, obviously, there's an obsession with costs at the moment from the regulator.

  • And I think, obviously, we need to operate value for money. Now, our charges come down

  • every year. The industry's charges come down. We heavily negotiate. It's a little known

  • fact that multi-managers are one of the few investors that can negotiate beyond super

  • clean private discounts for the investors' benefit. So, our ongoing charges are falling

  • every year. But it's about the value, so we're genuinely whole of market, most cheap products

  • or not. They often are two asset classes, that kind of thing. And we clearly think it

  • takes a lot of people to generate the research you need. We're partners in our own business.

  • All our savings are in our own funds. We wouldn't have 10 people if we didn't think it was necessary.

  • But it comes down the net performance at the end. And you've got to beat inflation and

  • you've got to, we think cover the cost of advice because that's the market we operate

  • in and historically, we've done both of those things.

  • Cool. Well, thank you so much for your time. Thank you.

  • And thanks for joining us.

Welcome to the Morningstar series, "Ask the Expert." I'm Holly Black. With me in the studio

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A2 UK multi fund manager range performance qualitative

What is a Multi-Manager fund?

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    洪子雯 posted on 2019/07/12
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