Individual investors are warming up to a breed of investment vehicle long favored by institutions and the ultra-rich.
In 2004, so-called "manager of managers" funds took in a record $50 billion, more than doubling the inflows recorded in 2003 and up from a mere $8.5 billion in 2002, according to a recently released report from research and consulting firm Cerulli Associates, The Wall Street Journal reports.
Manager-of-managers funds are investments that pool money from a number of individual investors and spread the aggregate amount across a number of star money managers. Some retail investors, in an effort to emulate the wealthy, are opting to park their money in these funds, long a mainstay of institutional investors such as pensions and endowments.
The typical manager-of-managers investment consists of mutual funds but the fundamental difference is that it gives investors access to often-exclusive money managers that they couldn't otherwise afford.
While still considered somewhat of an esoteric investment vehicle, these products are now being offered by an increasing number of firms, ranging from private bank Northern Trust to mutual fund giant Vanguard Group, which manages roughly $110 billion in manager-of-managers funds, the Journal report said
Cerulli research shows that manager-of-managers funds are growing at a faster clip than their cousin, the fund-of-funds.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.