The 16 new funds, described as “building blocks” by John Kelly, head of multi-manager development at Abbey, will be used as frameworks for new funds created out of the mergers of its forthcoming consolidation process.Structured either as Oeics or unit trusts, the first funds to be launched will be index trackers. However, they will not be launched for the time being as the group continues with further preparatory work, says Kelly. “The idea of the building blocks is that we will use them as the foundations of a consolidation process that results in a net reduction in the total family,” says Kelly.
The group is aiming to consolidate funds with similar objectives within its range, in the hope of cutting down on proliferation and lowering costs. “We currently have a range of over 100 funds; we want to take that down and our target for this year is to reduce by one-third,” says Kelly. Kelly would not speculate on a timeframe for the consolidation and merging of funds, but says Abbey will make that decision when it is sure that the framework is in the best shape for the investors. He adds that the group is still in the design phase, but is nearing the start of its next stage, which will include extensive consultations with its clients and investors.
Kelly admits that the procedure is ongoing and the relationships are complex, but says the “programme is nearer the end than the start”. The creation of a new structure is likely to continue for the first four to five months of the year. The recent fund approvals are part of a rationalisation process which has been in progress for the last year. Abbey launched its range of multi-manager funds in September 2003 and outsourced £27bn from its active fund management portfolio to external managers a year ago.