Why do we believe in fund of funds?
Our preferred strategy is investing in a portfolio of funds, rather than investing directly in shares, bonds or other securities.
We believe this reduces risk while producing superior long-term returns. Which, of course, is the dream scenario for any investor. It also gives us flexibility and freedom.
In a more traditional model, all of a fund’s money is controlled by only one or two managers. The managers choose which stocks to invest in; but their scope is usually limited to a fairly constrained area or asset class. They can also be prone to invest in a particular style – their personal one or that of their company – which may not be universally appropriate.
But T. Bailey’s multi-manager funds allow our fund managers to put money into a diverse range of asset classes and funds. Eggs, therefore, can reside in a greater number of baskets. And the most apposite management style, as well as the best funds, can be selected.
Fund of funds v. manager of managers.
We’ve expressed our preference for a multi-manager approach to investing, but why did we choose fund of funds rather than manager of managers?
Well, the latter – often run by institutional investment houses – can be unwieldy because of the contracts that have to be put in place. Given the volatility of the market, we’d much prefer the ability to act rapidly and decisively. Fund of funds gives us that ability.
Fund of funds have the added advantage of giving us access to certain investments that are unavailable to retail investors. With a wider choice at our disposal than a direct client would have. And we can make investments more cheaply, too.
These general advantages of fund of funds should be considered in conjunction with T. Bailey’s rather more specific advantage: its skilled investment team. Ever-vigilant, our team aims to calculate the optimum combination of funds that should perform best together.
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The value of your investment and the income derived from it can go down as well as up, and you may not get back the money you invested. When investing in retail unit classes, capital appreciation will be affected by the impact of initial charges and you should therefore view your investment as a medium to long-term holding.