A Multi-Manager Approach to Cross-Border Portfolio Management

by Jun 5, 2018Investment Planning

In a previous blog entry that you can find here, I discussed some of the regulatory issues associated with portfolio management in the cross-border context. For the moment, let’s set regulatory issues aside and focus on cross-border portfolio management purely from an investment management point of view. Through this lens, we will provide our perspective on which approach to portfolio management is preferable for cross-border clients.

The two typical approaches to portfolio management are single manager and multi-manager.

In a single manager approach, one portfolio manager is responsible for building a portfolio by selecting appropriate securities and strategies. Some of the benefits of this approach include:

  • Convenience and efficiency in monthly reporting and tax management;
  • One point of contact for client relationship management and portfolio construction/asset allocation; and
  • Fee economies of scale.

In a multi-manager (or manager-of-managers) approach, a portfolio is constructed using multiple managers, with each manager solely responsible for their specific sleeve or component of the portfolio. Managers are typically selected for fit within a strategic asset allocation given their expertise in a specific asset class (e.g., high-yield bonds, global equities, structured credit, etc.). Someone—either the client or a trusted advisor—needs to coordinate mandates between the managers, define the allocations to each, and monitor the performance of the individual components at the total portfolio level. Some of the benefits of the multi-manager approach include:

  • A wider selection of managers to choose from, with the opportunity to identify, select, and engage the best managers for a specific asset class or investment style;
  • Diversification of thought and investment processes through exposure to assorted strategies and areas of the market; and
  • Access to external and independent investment expertise to assist in building a diversified portfolio.

MCA’s clients operate in a multi-jurisdictional space that requires consideration of complex cross-border tax and other financial planning matters, so we strongly believe a multi-manager approach to portfolio construction is appropriate for most client situations. Our clients quickly recognize and appreciate the diversity of thought, strategies, and investment philosophies and processes that a multi-manager approach can bring.

MCA’s value proposition in investment services includes portfolio construction and asset allocation; portfolio restructuring and transition; external manager search, selection, and evaluation; and independent and comprehensive reporting and oversight over total portfolios and their underlying managers. At all times, our overarching goal is to implement solutions that comply with both investment and regulatory requirements while respecting our clients’ cross-border lifestyle.

Edwin Wong

Edwin Wong

Vice-President – Family Office Investment Services

MCA Cross Border Advisors, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.>