LONDON -- Managers of managers such as SEI Investments and Northern Trust Global Advisors Ltd. that specialize in multimanager mandates have formed an association to lobby in Britain on the industry's behalf.
The Association for Multi Manager Investment was set up in London in late February and is intended to raise the profile of this form of investing at a time when many U.K. pension funds are dissolving balanced mandates.
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"We ought to raise our profile and do something about maintaining standards in the industry," said Tony Earnshaw, managing director of multimanager products for Northern Trust Global and chairman of the new association.
He thinks the association should, in the next three years, aim to have multimanager strategies included in as many manager searches as possible. But the association is still new and its members are still busy working on defining long-term aims and objectives, he added.
Other members of the group are SEI, Global Asset Management Ltd., Frank Russell Co. Ltd., Stamford Associates (U.K.) Ltd., and William M. Mercer Ltd., all of London.
Northern Trust Global has been running multimanager portfolios in the United Kingdom for 12 years, but it is only recently that interest in these strategies has increased. The amount of new business has doubled each of the past two years, Mr. Earnshaw said.
Northern Trust was hired last year to manage three quarters of the assets of the 77 million ($122 million) Rohm & Haas (U.K.) Ltd. Pension and Life Assurance Scheme, Croydon, in U.K. and international pooled equity funds. Rohm & Haas was the first U.K. pension scheme to explicitly seek a multimanager approach. The move followed disappointment with the performance of its previous managers Deutsche Asset Management Ltd. and J.P. Morgan Investment Management Inc., both of London.
Increased interest in the approach has coincided with the widespread breakup of balanced mandates as U.K. pension funds seek to exercise more control over their managers and their investment returns, Mr. Earnshaw said.
Research published late last year showed that 45% of U.K. pension fund trustees were unhappy with their current money managers, but less than 5% of them were willing to select new managers without external advice. Patrick Disney, SEI's managing director of U.K. and European institutional business, believes this provides an important niche for the multimanager approach as it removes from trustees some of the burden of selecting and monitoring managers.
Small and medium-sized pension funds are likely to be the biggest market for multimanager groups, said Stuart Gordon, European partner at Mercer.
He is in charge of SuperFlex, the multimanager business that Mercer recently sold to PSG Escher Investments (Pty) Ltd., Johannesburg. Mr. Gordon is due to be appointed U.K. managing director of Escher U.K. Asset Management Ltd., London, the company that will run PSG's multimanager business in the United Kingdom.
Although a member of the AMMI William M. Mercer is unlikely to continue to participate in the group now that it has sold its multimanager business, said Andrew Kirton, head of U.K. investment consulting at Mercer.