Multi-manager Product Growth Surpasses $1.3T

Assets in multi-manager products grew by 40% during 2005 to exceed $1.3 trillion, according to the recent Cerulli Quantitative Update, Global Multi-manager Products 2006.

The survey of 12 asset management marketplaces also found that funds of funds grew by 51% to $665 billion, outpacing the asset growth of managers-of-managers, which grew by 31% to $667 billion, according to the report from Cerulli.

Cerulli partly attributes that growth to the expansion of those products in markets where recently-enacted regulations (or deregulation) helped them gain assets. The firm also accredits the global growth rates for funds of funds and manager-of-managers to similar results in the U.S., the largest multi-manager marketplace.

Several catalysts, including the increasing demand for embedded-advice products as well as the increasing split between manufacturing and distribution functions in fund management, are fueling the growth of assembled investment products, the news release said.

In fact, fund of funds growth in the U.S. was driven in large part by the success of lifecycle funds, which offer embedded advice.

Cerulli also found that manager-of-managers products gained $62 billion in net new inflow, and funds of funds – even excluding funds of hedge funds – received nearly $147 billion in net new business. The firm expects that multi-manager vehicles will maintain their five- year compound annual growth rate of 16% until 2010, with multi-manager products worldwide doubling to more than $2.8 trillion before the end of the decade.