Skandia Investment Group has said it will be sticking with its more decisive investment style following better performance over 12 months.
Ryan Hughes, a fund manager at Skandia, confirmed the group will continue to rely more on managers to move their portfolios and less on Skandia’s centralised investment committee.
The shift has enabled Skandia to allocate assets more tactically and move faster to change managers following the volatility of the financial crisis.
However, despite a short-term improvement in performance, Hughes says the changes will form part of Skandia’s longer-term strategy, particularly as certain Skandia funds such as UK Best Ideas have still underperformed their peer groups over longer periods.
“We didn’t need to go through all the hoops. We were a little committee-heavy, but we’ve empowered the fund managers. Decisions don’t have to get signed off. The committee-based structure was fine five to 10 years ago, but markets have been changing rapidly,” he says. (article continues below)
Skandia also closed a number of its single-strategy multi-manager funds and is now marketing its offshore single-strategy funds more actively.
It had no funds in Chelsea Financial Services’ recent Relegation Zone, which featured a large number of multi-manager funds, including in particular single-strategy multi-manager vehicles.
Hughes says it was very difficult to gather assets achieve multi-manager outperformance in efficent markets such as American equities.
He predicts groups will close many more small and inefficient strategies over the coming years.
In its multi-manager range, the manager says Skandia is focusing most intensively on its risk-rated range, which offers a series of asset allocations for clients depending on their tolerance for risk.
Although Hughes says new regulation such as the retail distribution review favours risk-rated funds, the European Union is debating a series of risk ratings for its new Key Investor Information Document (KIID) that would differ in their current form from Skandia’s model.
The KIID is due to replace the simplified prospectus for funds and would make it obligatory for funds to advertise their risk levels to investors in a manner determined by the European Union.
However, Hughes says it is unlikely the European Union will be able to dictate a single risk model for the continent as a whole, observing there are still many different ways of assessing the risk of a portfolio.