Fund Managers (Asset Allocations)

At the beginning of July, I decided that it would be a good idea to approach investment managers with a view to establishing what their own personal asset allocations looked like at the moment. The initial approaches were limited to the companies that I hold a written letter of appointment from and who also have an active management investment team.

I wanted to establish whether these people, that are responsible for managing our cash, actually lived by the strategies that they adopt for other peoples money and whether they reflected the typical managed funds that they promote.

As of today, only two of the original nine companies that were approached, have supplied a meaningful response, in terms of the original request. Take a bow, Standard Life and Merrion Capital.

Even though assurances were given to the remainder regarding the way the information would be presented and that no individual ‘names’ would be used, they still declined to participate. I was very disappointed with this.

Hibernian refused point blank, without any coherent explanation whatsoever. Eagle Star also refused but they cited ‘privacy’ and fear of the information being interpreted as advice. Irish Life declined, as did Canada Life. There was no response from Friends First or Caledonian Life and Scottish Provident/Resolutions have indicated that they will be back to me shortly.

In an effort to understand the muted responses, I contacted an acquaintance at Clarus Investment Solutions to see if he would be willing to divulge this information. He had no problem in doing this as he considered it straightforward, non-sensitive and relevant to what they do as investment managers.

I was hoping that we could derive some meaningful interpretation of the information, even when we allowed for the fact that the individual managers would have varying risk profiles and objectives for their investments. I would have expected that the majority would have common allocations in equities, property and cash and that over the next few months their cash holdings would be fed into the other asset classes.

I can only speculate that some of the managers may have been embarrassed by their current asset holdings. It may well be that some are over-invested in equities and did not adjust their allocations in line with what was happening in the market. It may also be the case that others have adopted a more defensive strategy with their own money but are happy to hold 75/80% in equities on their managed funds.

So what can we establish from the information that was received from our three respondents? The allocations to property/equities and cash are similar at the moment. There would be a higher than normal percentage in cash but this is consistent with the uncertainty of current market conditions.

The cash content of their mix will be fed into other asset classes on a gradual basis, once the managers deem that the time is right for them, and that the asset splits will be consistent with their risk profiles and age and mirror a managed fund when things stabilize.

You can make your own call on those that did not respond.