Multiple Managers

Multiple managers refers to the multiple involvement of different managers in the investment strategy of a fund. In the case of multiple managers, an investment portfolio's assets are divided by individual managers. Various structures can be used for the management of multiple manager funds, however all funds typically have a single investment advisor who provides oversight for the fund.

Multiple manager funds can build on the concept of sub-advisory relationships or fund of funds vehicles. These funds are typically overseen by an investment advisor who may be affiliated with the offering company or associated with a sub-advisor relationship.

Multiple manager strategies can be effective products. These funds allow the investment advisor to potentially choose the best available managed funds for each portion of an allocation. Investment managers may also contract certain portions of a fund to hired managers. Generally fees will be relatively higher in multiple manager funds than standard pooled funds. However, there may be some cost efficiencies involved with investing in individual funds rather than transacting a portfolio of individual securities.

In some situations an investment advisor may contract with multiple managers to balance individual allocations. These allocations are usually managed by the sub-managers as a separate account. The managing investment advisor works with the sub-advisors to ensure cohesiveness and efficiencies.

Rather than contracting with individual sub-advisors to manage fund allocations, some investment advisors will choose a fund of funds approach. In a fund of funds structure utilizing multiple managers, the investment advisor would invest directly in publicly traded funds different managers. The investment advisor still works to oversee the assets in the fund comprehensively, however they do not interact with the sub-advisors or manage funds in separate accounts.

Many multiple manager fund investment options provide investors with access to a fund of hedge funds. Goldman Sachs and Neuberger Berman provide two examples.

Goldman Sachs Multi-Manager Alternatives Fund

The Goldman Sachs Multi-Manager Alternatives Fund provides a portfolio of alternative investments. The Fund allocates to numerous alternative investments including equity long/short, dynamic equity, event driven and credit, relative value, tactical trading and opportunistic fixed income. It allocates assets to numerous sub-advisors including Acadian Asset Management, Algert Global LLC and QMS Capital Management LP.

Neuberger Berman Absolute Return Multi-Manager Fund

The Neuberger Berman Absolute Return Multi-Manager Fund includes core hedge fund allocations optimized for the best risk/return tradeoff. The Fund’s top allocations are to Good Hill Partners, managing 19.9% of the Fund with asset-backed securities, and Sound Point Capital, managing 19.9% of the Fund with a credit long/short approach.