About Us : Why Manager of Managers

Why Manager of Managers

Why Pursue a Manager of Managers Approach?

No one money manager has a monopoly on the best investment ideas.

In our experience, every money manager has strong years…and not-so-strong years. It's impossible to predict which year will be which.

For this reason, we maintain a disciplined, long-term perspective, calling on a number of proven institutional money managers (known as sub-advisors) on behalf of our investors.

As a manager of managers, our goal is to engage the most effective money managers for each asset class, investment style or market strategy — whether that can be done through a single sub-advisor or through a combination of sub-advisors.

When multiple managers are deemed more beneficial for a given strategy, each becomes responsible for a portion of the combined assets and for investing that portion directly in the securities that best suit the investment objectives of the portfolio.

The American Beacon approach is unlike a fund-of-funds strategy or a portfolio-of-funds strategy. Those strategies both involve investing in other investment funds, rather than individual securities. As the following chart illustrates, the differences can be striking.

SERVICE CONSIDERATION MANAGER OF MANAGERS FUND OF FUNDS PORTFOLIO OF FUNDS
Manager Diversification – splits assets among a combination of investment managers
Capacity – ability to fully invest additional monies from investors in desired investment style
Selection & Monitoring of Managers – detailed review of investment managers before and after hire to ensure quality and consistency of performance
Auto Rebalance – allocate portfolio monies automatically as markets rotate
One Statement – consolidated reporting from one source to investors for statements and tax reporting
Verifiable Historical Track Record – the performance of multiple sub-advisors is integrated to create a single, aggregated track record for the entire fund portfolio over time  
Ability to Negotiate Fees – advisor may negotiate fees directly with each manager versus “off the shelf” pricing    
Set Portfolio Guidelines – advisor determines permissible investments to adhere to fund objectives    
No Liquidation if Manager is Terminated – assets may be transferred to another investment manager without incurring transaction costs or market losses due to a liquidation  
Access to Non-Mutual Fund Managers – many industry-leading investment managers specialize in separate account active management with high minimums    
Economies of Scale with Service Providers – managing large assets with an established infrastructure provides cost savings as fees are negotiated and assets grow    
Mask Trading – individual investment manager’s trading activity is aggregated, obscuring the manager’s intent and preventing others from affecting the price of the traded security by buying or selling the same security at the same time
Real-Time Portfolio Information – underlying investments are transparent to provide portfolio managers with access to an accurate picture of portfolio holdings on a real-time basis

* Actual characteristics depend upon the proprietary structure of the product.

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