Mergers raise questions of value
Monday 23 February 2009
The FT reported on more fund manager mergers being expected this year.
How does this affect you as an investor?
With share prices falling, fund managers have seen their assets under management fall. This means falling income. Smaller funds could be merged as cost cutting takes place.
As the FT reports, "M&G has just gained approval to merge three funds: Balanced Portfolio will join with its Managed fund; Cautious Managed will move into Cautious Multi Asset; and Growth Portfolio will be merged with Managed Growth.The three funds to be merged are tiny: £12m, £29m and £7m respectively. M&G claimed the move would enhance returns by increasing the flexibility of the merged funds. However, a more immediate benefit for investors will be the reduction in the total expense ratio (TER) of the three merged funds.”
But when the mergers take place how do investors know if the risk and the mandates of the manager have not changed? Any merger of your investments will alter your portfolio mix and therefore a review should be prudent.
It is good news in theory if you stay with a fund that has lower costs, but costs are also being cut in the analysts and other support staff.
Now is the time to find out what your fund managers or advisers are doing with your money and how these managers are dealing with these changes. I do repeat myself in stating all investors need to be carrying out due diligence on their investments…it’s a message I will repeat again again and again.
posted by Murray Round Wealth Management @ 16:07,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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