T Bailey

Fund of funds success

Published 12:00AM 31 March 2009

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T. Bailey research underlines success of multi-manager strategy

• Over 7% outperformance after six year
• Performance measured AFTER all charges
• Additional CGT benefits to multi-manager 

New research from multi-manager specialist T.  Bailey shows that investors who have used a fund of funds strategy over the long term have been more likely to achieve better returns, after all charges, than those using single manager funds. 

Using data from Lipper Hindsight, T. Bailey  measured the average outperformance of funds of funds over the average  of  single-manager funds  across several popular IMA sectors in which there were enough funds with a sufficiently long performance history for a statistically valid comparison. The figures were AFTER all charges and across six years to the end of 2008.

Initially the outperformance of funds of funds was small - less than half percent in year one - but by year five it had reached over 6.5% on average. Over six years the lead had stretched to close to 7.5%.

T. Bailey Assistant Fund  Manager Elliot Farley said: "Investors in equities are often advised to look at a five year investment horizon and this research demonstrates the advantage of the multi-manager model for many investors over that period of time.

"We have always argued that it takes a couple of years for the benefits of funds of funds to kick in, but that eventually the combination of fund selection, diversification, asset allocation and active management that you get with the multi-manager model, really hits home. These new numbers validate that."

 

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