Japan and Europe remain popular markets for multi-managers. Mr Husselbee says that there remains some value to be made up in Europe, in spite of its recent strong run, but that it is a stockpicker’s market. Gary Potter, co-head of multi-manager at F&C Investments, says the group has recently taken some profits in Europe after benefiting from the rally last year.
The real difference between the multi-managers and discretionary managers has been in the former’s willingness to look at alternatives as a means of diversification, or as a means to supplement yield. Mr Le Jehan says: “The idea for our alternatives book is trying to find investments that give us proper diversification, rather than simply low beta versions of equity funds. We are trying to find negatively correlated investments and replicate the type of security otherwise provided by government bonds. We still use funds such as Hugh Hendry’s Eclectica fund and also the Majedie Tortoise fund. We have no credit long/short exposure, simply because we don’t like a lot of the credit markets.”
The extreme valuations being seen in some financial markets are forcing activity on the part of multi-managers. They are being forced to look beyond conventional strategies. It is not an environment likely to favour a light touch approach.
Cherry Reynard is a freelance journalist
