Balance tips towards discretionary solution

Balance tips towards discretionary solution
News from Financial Times:

Conventional wisdom suggests that smaller investors should invest in funds, to benefit from the economies of scale of pooling assets. The solution of choice has been to invest in a multi- manager or fund of funds product. As a result, the balanced fund sector has been one of the big growth stories of the UK mutual fund business over the past decade. Assets under management in the sector have virtually doubled over the past five years, compared with a 66 per cent increase across mutual funds in general.

Recent evidence suggests this tide has turned in 2011, at least in the retail market, which accounted for 85 per cent of balanced fund sales in 2009. Independent financial advisers are choosing discretionary managed portfolios as the new solution for smaller clients. This counter-intuitive development is driven by three key factors: unintended consequences of changing regulation; changing technology; and the growth of indexation.

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