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Mutual Funds that are managed by Sub-Advisors

beebee
edited March 2017 in Fund Discussions
What's your advice when it comes to selecting mutual funds that are managed using sub-advisor?

A recent article from FA (Financial Advisor) mentions,
...many institutions and financial advisors favor sub-advised funds because they can hire the best managers and not rely on in-house staff. Currently 13% of mutual funds are managed by outside advisors. And assets in sub-advised funds have increase 25% to $755 billion since 2004. By contrast, assets of all mutual funds are up about 15%, or $453 billion, over the same period.

-(The) largest players in the sub-advisory marketplace include Wellington Asset Management, Alliance Bernstein, PIMCO and Prime Cap. But there are a number of smaller shops with strong track records.

-There often is turnover with investment company sub-advisors.

- The Masters' Mutual Funds group of four funds has outperformed the category average every year from 2002 through July 2006. Each fund has several highly regarded sub-advisors from other mutual fund shops. The Masters' Select Equity Fund, a large-cap blend fund, invests in the best picks of stellar managers, such as Bill Miller of Legg Mason, Chris Davis of Davis Select Advisors and Mason Hawkins of Southeastern Asset Management. The fund has outperformed the S&P 500 over the five years ending in July 2006.
Article:
fa-mag.com/news/sub-advisors-are-in-the-house-1503.html

Comments

  • LLJB
    My thoughts are that I wouldn't analyze a fund any differently regardless of whether it's sub-advised or not. I want to assess the people who are managing my money and then I have my own criteria in terms of expense ratios, AUM, turnover and so on. Everyone gets judged by the same standards and whether the best choice ends up being a sub-advised fund or not doesn't really matter to me.
  • VintageFreakVintageFreak
    Not sure how to go about this one. Sometimes subadvisors take over the fund. Like with FMI, we have PROVX and BVAOX. Vanguard hires subadvisors all the time. Not sure it is possible to make a call when it is good idea or when it is bad idea. It can contribute to higher ER, but then again maybe not since the mutual fund company can bring economies to scale while the subadvisor who doesn't have facility to manage the back-office for the fund would rather just focus on investing.
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