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'Manager of managers' is the title used to describe an independent firm which specialises in researching and selecting different fund management groups and bringing them together in order to manage an investor’s money. A Manager of managers will select individual fund managers from the multitude of companies worldwide and can also give access to some fund managers who are not usually available to the general investing public, but only to large institutional investors. Unlike a traditional process in which the financial adviser must ultimately pick the fund managers, the Manager of managers uses extensive expert knowledge and resources to choose the actual underlying fund managers, determine the proportion of the fund that each manager will manage and makes ongoing hiring and firing decisions. This process happens continually rather than the more traditional approach where the financial adviser reviews a portfolio on an annual basis, which may be many months too late if a fund management group has started to underperform. By using managers with differing styles, the Manager of managers process will provide a fund with diversity across all styles whilst reducing risk. An additional benefit of the Manager of managers fund compared with a traditional fund is that the Manager of managers monitors all trading activity on a daily basis. This helps ensure that the managers follow their mandates and do not deviate from their areas of expertise. As might be expected the management fees for such a fund tend to be more expensive than a standard managed fund. These funds can also be less flexible than say a Fund of Funds approach as when a chosen fund manager leaves a selected fund it is hard to replace them quickly.
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