"2018 has again seen falls in the average OCF across both multi-asset and multi-manager as advisers and investors continue to focus on costs, and managers respond to this, with the multi-asset average falling by 5 basis points to 1.13 per cent from 2016, and multi-manager decreasing by 12 basis points to 1.37 per cent."
For Mr Justham, an adviser should be considering cost, as it is often "the variable which drives the preference for active or passive implementation".
This means a multi-asset fund comprised of purely passive plays with a slight asset allocation overlay will tend to be less costly overall for the client than a bells and whistles multi-asset portfolio that can invest in the whole range of permissible instruments and securities.
"Net performance is arguably the metric by which the argument should be settled", he comments, "although headline costs are often a key discussion point.
"Finding a fund whose style, performance and risk management fit within your proposition and client's objectives is the priority, although if this can deliver such elements using active or passive solutions, this allows a lot more flexibility for advisers during the recommendation process."
But the virtue of active management means the manager remains within a particular volatility boundary, with an expected level of return, despite the potentially higher cost.
Frank Potaczek, head of UK proposition for Architas, concurs. "A good multi-asset manager will look to diversify away from risks within a portfolio such as credit risk, market risk, currency risk and interest rate risk.
"This is what investors should be getting for the fee they pay for a multi-asset fund."
simoney.kyriakou@ft.com
