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Aberdeen plans multi-manager mergers

MergerAberdeen Asset Management proposes to merge three of its equity multi-manager funds into the Multi-Manager Equity Managed Portfolio.

In addition, the group will merge two other funds into the Multi-Manager Multi-Asset Distribution Portfolio.

The number of multi-manager funds continues to decline as investors are asking themselves whether the costs they are paying for actively managed funds are justified.

Aberdeen says the mergers, as proposed, would create larger on-going funds with critical mass to attract new investors. The anticipated level of other expenses should also be lower owing to economies of scale.

The group proposes to merge the following funds into the £56.3 million (€66 million) Multi-Manager Equity Managed Portfolio:

• Multi-Manager UK Growth Portfolio (£17.7 million)

• Multi-Manager International Growth Portfolio (£25.5 million)

• Multi-Manager Emerging Markets Portfolio (£12.3 million)

The two funds proposed to be merged with the £16.8 million Multi- Manager Multi-Asset Distribution Portfolio are:

• Multi-Manager UK Income Portfolio (£21.7 million)

• Multi-Manager Sterling Bond Portfolio (£14.7 million)

Graham Duce, the co-head of multi-manager funds, says these proposals are “in the best interests of clients and aim to consolidate our multi-manager range and create portfolios of critical mass”.

Duce adds that interest in multi-manager funds with broader investment remits has picked up.

According to Lipper, asset managers launched 607 new multi-manager funds in Europe in 2007. This compares to only 394 in the whole of last year and 238 until the end of October this year.

Not only has the number of new fund launches declined in recent years, the number of asset managers in the sector has also seen consolidation.

Henderson Global Investors, for example, took over Gartmore, F&C Asset Management merged its multi-manager fund range with that of Thames River Capital. Schroder Investment Management combined its multi-manager and multi-asset divisions, while Santander Asset Management reshuffled its senior management team.

Traditionally the market has been dominated by a few big players and new launches have often struggled to attract new money.

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