Insinger favours low-key approach

In the debate between fund of funds and manager of managers, investors might be forgiven for wishing for a little more clarity. But whatever else they might get from the multi-manager funds run by Insinger de Beaufort, it will not be an easy answer on this front.

Insinger describes its offering as manager of managers, although in fact it invests directly in existing funds rather than segregated mandates. Sales and marketing director Peter Fitzgerald says: “The UK funds are legally structured as funds of funds in that they invest in existing retail or institutional funds, but the research is carried out at the manager level. We try to get away from the debate as to whether fund of funds or manager of managers is better, and just look at the underlying investment process.”

The Dutch firm offers three multi-manager Oeics to British investors, covering income, balanced and global strategies. They are managed by Guy Ester and Garth Bregman. It also has discretionary portfolios, which include funds of hedge funds. The Oeics are distributed mainly through intermediaries and are also available through life fund links with Canada Life. A recent tie-up with fund supermarket Selestia has further broadened the funds’ distribution.

Insinger approaches fund selection from an absolute return perspective. Fitzgerald says: “Like most people, we have a proprietary database for our initial quantitative screening. We primarily focus on the track record of the manager rather than the fund. We focus on those who consistently deliver over a three-year period against an appropriate peer group, then we follow that up with an interview.” Understanding how managers have achieved their returns, and the risks they have taken to do so, is fundamental to the process.

The Income fund sits in the Cautious Managed sector, though its claim to be a manager of managers fund excludes it from the fund of funds performance statistics opposite. It follows a 60/40 split between bonds and equities, in both cases focusing on the British market. Fitzgerald says this rigid asset allocation is more liberating than constraining: “We don’t follow fads and trends; we stick to our long-term strategic asset allocation. It allows intermediaries – our end-users – to use the funds as core portfolios and adjust their asset allocation with satellite holdings.

“Fans of active asset allocation say getting the asset allocation calls right can account for as much as 90% of returns, so if you are engaging in asset allocation, you will need to spend the majority of your time monitoring macro factors.” Insinger prefers to stick to picking the right managers, and Fitzgerald says the team particularly values risk-adjusted performance.

Picking the right managers is a long game and Insinger does not turn over the Income fund without good reason. The portfolio has changed only twice in as