Why is Multi-Manager better?
A Smarter Concept
We eliminate single manager risk
If you rely on one manager, investment style or philosophy, and it fails, your investment outcome fails with it. That's not a smart way to plan for your future or provide a retirement lifestyle. Fusion Investing clients have the advantage of a Multi-Manager Strategy. Instead of relying on just one manager or adviser, a multi-manager portfolio spreads and reduces your investment risks across multiple managers so no single manager can derail your outcome.
We eliminate financial adviser risk
We believe very few financial advisers are as qualified as the personnel in fund manager investment teams to make 'coal face' investment decisions. This has come from a long career as a financial adviser. Advising is a full-time profession and if the adviser also wants be an investment expert, they risk a conflict between dedicating the appropriate time to their clients/building the business, and keeping up with the massive amount of research involved with selecting assets, hedging policies, tax applications and international expertise sources. The most likely result (and it's happened many times) will be portfolios constructed from past result surveys, personal hunches and marketing publications, which could be a recipe for disaster.
As advisers, our optimum role is to identify what strategy best suits your needs, then match that with the best industry expertise to build a portfolio that minimises your risk, without reducing your ability to maximise returns.
That cannot be done if we also act as the investment expertise duplicating and overriding the role of the fund managers. So, at Fusion Investing, we extract ourselves from the day-to-day investment processes and concentrate on selecting the best managers. Then, we apply your growth allocation equally among them, without bias, as there is no way to foretell which will be the better performer in advance. Each gets the same amount to manage. Each will do their best to grow your funds in their own way. This means your investment outcome won't depend on an adviser as anyone can divide their portfolio equally into six funds. Also, if an investor wanted to select their own Growth managers, even if they were different to the ones we recommend, the outcome would be similar. Therefore, your outcome doesn't depend on Fusion Investing, but an equal selection of readily available Growth fund managers. Of course, we believe our research capabilities to identify the best Growth managers to use is greater than most investors, so we'd love to help you get the best from the investment industry.
How do we achieve this?
- First, every fund manager available to our investors is rigorously interviewed to ensure their expertise is worthy of inclusion in our clients' strategies. Their investment teams are grilled about methods, personnel, philosophies and resources, to ensure the investment style they promote, is actually what they operate with. Then, their Environmental and Sustainability team is interviewed to again ensure they "practice what they preach".
- Then, once the managers have passed muster, we put multiple styles and experts into every strategy, equally and without bias. Every fund manager wants to excel and we harness that competition, aspiration and drive. Our managers don't collaborate with or defer to each other. We choose them for their individual philosophies and styles, then put them side by side, with each given the same amount to manage (eg. 6 managers = 16.6% each). Â Imagine the expertise of Milford Asset, Fisher Funds, Generate Wealth and others, working simultaneously on your behalf, instead of just one at a time! Each manager operates a separate, mini portfolio, where every asset class a growth manager may need is incorporated by them. These are not specialised asset managers where (say) emerging markets is all they manage, or Australasia is the only environment. Each manages a complete growth fund of their design, so an investor would see (eg) Milford Active Growth fund, Generate Focused Growth Fund, Pathfinder Ethical Growth fund and other complete growth funds in their mix. They won't see specialist funds like (eg) Smartshares S&P 500 Equity fund, Nikko Emerging Markets fund, Milford Trans Tasman Bond Fund and other specialist funds in their mix, as that would require Fusion Investing to act as the overall designer and manager of the portfolio, which we aren't as qualified to do as the fund managers themselves.
- And, it changes your investor behaviour.  Studies have shown investors often make less than the industry does, because many investors react to the inevitable ups and downs in returns, with several advisor or manager changes during their lifetimes. This results in leaving funds when you should be staying, and joining when you should be leaving, falling further behind each time. Using multiple managers is a truly lifelong strategy which eliminates the need for this behaviour. There is no need to be continuously looking for the "next best manager", as you already have 6 great managers in your portfolio or KiwiSaver account. Even if one needs to be changed, all that's needed is the manager to be replaced by another with similar investment style and the portfolio won't be affected unduly. Also, using an administration platform to administer any changes means it can done seamlessly, without switching Providers.
The diagram below shows the difference between your current single-manager/adviser reliance, and a Multi-Manager Strategy.
A Stronger Outcome
Our Multi-Manager Strategy (MMS) is very unlikely to be "number one", but it does mean you won't get to retirement and find your one manager has let you down. If you use just one manager and style, and they've performed below average, it could cost you dearly. Multi-manager investing eliminates this risk. In addition, by changing your behaviour to a long term "buy and hold" strategy, you'll eliminate behaviour risk from your outcome. When you add these advantages together, they can increase your outcome by tens, if not hundreds of thousands of dollars.
A Safer Experience
With multiple managers looking after your savings and investments, you won't have to worry about having chosen "the right" manager or adviser. That's an impossible choice anyway, but spreading your money further, across more assets, countries and economies, with more expertise working on your behalf, has to be safer than concentrating your retirement hopes in just one place.
The Designer
Martin Jago is the Financial Adviser and Founder of Fusion Investing, Fusion Investing is a Financial Advice Provider (FSP). Martin has over 36 years of financial and investment planning experience, having worked in companies such as Merchant Investors in the UK, AMP in Australia, Spicers Portfolio Management and Plan B in Auckland. Martin has worked in virtually every sector of the financial services industry and managed hundreds of portfolios with tens of millions of dollars under his care.
Martin has adopted a collective, multi-manager approach to investing after seeing many investors starting out with hope and expectation, to wind up with disappointment, and even capital losses, because they placed their faith in one adviser, or one approach to investing.
Martin is able to invest through virtually all New Zealand's major investment firms. In every case, his due diligence takes him to the experts within those companies, at the "coal face", where he drills down into the investment strategies and ethics used. Those managers are only utilised where they show clear differences in styles so your savings and portfolios can be constructed with multiple, non-correlated managers, giving you the most reliable outcomes.