Multiple-Counsellor System Introduced To The Foord Equity Fund
From 1 December 2009, Foord implemented an exciting new development in the management of the Foord Equity Fund unit trust. The change was to introduce a second fund manager using a process called the “multiple-counsellor” system of investment management.
In conventional fund management a single fund manager typically takes full responsibility for the management of a portfolio. In contrast, the multiple-counsellor approach involves dividing the assets of each portfolio among a number of portfolio managers. These managers then make independent investment decisions and manage their portions as though they were separate funds. The system was pioneered by Capital Group in the U.S. in the late 1950’s (see www.capgroup.com).
Capital’s initial objective was to implement a system that would manage the growing size of their portfolios. But in addition to providing scalability, Capital also found that the result, which was a blend of each manager’s best efforts, contributed to consistency of returns, continuity of management and reduced key-man risk.
Initially there will be just two managers assigned to each multiple-counsellor portfolio. Dave Foord will continue to manage the major portion of these portfolios. However, Dane Schrauwen will be responsible for a smaller share. Dane was appointed in July from BoE Private Clients where he worked for 14 years as a portfolio manager. He also served on BoE’s investment committee and was jointly responsible for shaping many of BoE’s current investment processes.
While the return on the Foord Equity Fund will result from the combined efforts of Dave and Dane, it would be wrong to say that the Fund is being co-managed or managed by consensus or committee. Each manager will implement his view in separate sub-portfolios, which will be combined for client reporting and pricing purposes.