Reviewed by Sep 30, 2020| Updated on
Multiple managers refer to the investment strategy where more than one or multiple investments are involved in the management of a fund. In the case of multiple managers, the assets in your fund portfolio are assigned to different individual managers depending on the requirement. Though multiple managers manage the funds, all funds are collectively supervised by a single investment advisor.
Multiple manager funds can be a quite effective strategy as these funds allow the individual managers to regulate the portion of allocated funds in a better manner. In some cases, the top-tier managers can also choose to hire an external manager to supervise their funds.
However, the cost involved in multiple managers strategy is generally higher than that of the regular funds. In such cases, the managers ensure that the cost involved in individual fund investments is less than that of managing portfolios with individual assets/securities.
An investment advisor can also choose to come into an agreement with multiple managers to ensure stability in the individually allocated funds. In such cases, the multiple managers also referred to as sub-managers, manage these allocations as a different account. In the same line, the advisor and sub-managers work hand-in-hand to ensure the balance and effectiveness of the allocated funds.
Investment advisors may also opt for a fund of funds strategy instead of contracting with their sub-managers to balance fund allocations.
The fund to funds approach involving multiple managers will allow the investment advisor to invest in publicly traded funds with the individual managers directly. Also, this will give the investment advisor a better oversight of the funds being managed and monitor the funds comprehensively.
The only downside to the fund to funds approach is that there will be no interaction between the investment advisor and the sub-managers. Also, the funds will not be managed in separate accounts.