Why multi-manager investing?DiversificationDiversification or 'not putting all your eggs in one basket' is at the heart of how we build our funds of funds. We do not believe that any one manager or class of asset will perform consistently well all of the time - there will be highs and lows in performance over different periods.By spreading our funds, we aim to spread the investment risk across a range of assets, geographic regions, managers, and investments such as corporate bonds, US shares and UK property. By doing this, we aim to reduce the risk the portfolio would be exposed to if the assets were all in one area or class of asset. Bringing together funds that tend to behave differently in varying market conditions may help to prepare a portfolio for a range of market conditions. There is no guarantee that this strategy will work all of the time. The effect of changing economic conditions is complicated and the performance of one class of asset could affect another. Remember - the value of investments and any income from them can fall as well as rise and is not guaranteed. As a result you may get back less than you invested. The value of funds can also fall as well as rise purely as a result of changes in exchange rates.Managing riskOur investment team take the hard work out of monitoring risk for you. Our experienced team manages risk in many ways. We do this:1 In the way we choose our investments, making sure that each fund we invest in has been thoroughly researched and analysed;2 by choosing different managers within our portfolios who have different styles to make sure we do not invest too much in any one area; and3 by regularly monitoring and re-balancing the underlying investments to make sure that each fund is invested in a range of assets that, in our view, suits its risk profile.Thorough researchWe choose managers based on our own thorough research. This is carried out by our team of investment professionals who each have their own specialist areas. They have the tools needed to help them do in-depth work on managers. The team holds approximately 1,000 face-to-face meetings each year around the world, including in the US and Asia, and only make a decision to invest once they feel they have a solid understanding of the manager, how they add value and the role they could play in our portfolios.Tax advantagesMulti-manager funds can provide a tax efficient way to hold a number of a wide range of underlying holdings. Our fund managers can make changes to the portfolios whenever they want without having to pay capital gains tax (CGT). You will only pay CGT if the gains in your investment when you sell or switch funds take you over your annual CGT tax-free exemption. If you are investing through an Individual Savings Account (ISA) you do not pay any CGT even when selling or switching funds.Remember tax rules can change over time and the value of any tax benefits will depend on your circumstances. Please speak to a tax professional for more advice.