It's an unmistakable market reality: asset managers have recognized they can no longer be all things to all people. They have come to the realization that they cannot always develop every aspect of the ever-broadening range of increasingly complex portfolio products that their clients demand. As a result, more and more are leveraging their internal capabilities in conjunction with external niche-market expertise by implementing a manager-of-managers (MoM) investment model.
In brief, a manager-of-managers is an investment advisor who hires other professional investment managers, or sub-advisors, to oversee specific aspects of an investment portfolio. A MoM typically focuses more on the manufacturing and distribution of a product, rather than the actual management of the assets. This role is left to the sub-advisors on an outsourced basis whereby the best managers can be leveraged for their particular area of investment expertise. The MoM dynamic creates a symbiotic relationship between both investment advisor and sub-advisor where distribution and manufacturing strengths are aligned with specific investment strategy expertise.