Investors would be wrong to overlook multi-manager funds just because of their high TERs, according to leading IFAs, who believe a number of options still represent good value for money.

In a recent FE Trustnet poll, 77 per cent of respondents said they thought multi-manager funds were too expensive. The double layer of charges means that these products generally cost more than their single-manager counterparts.

Moreover, a recent FE Trustnet study revealed that multi-managers have underperformed their rivals over five years and taken on more volatility.

However, IFAs say that the benefits of the funds mean that the very best should provide better returns over the long-term.

"We think as long as you are picking the right funds and making the right decisions they are good value," said Doug Millward, investment analyst at Lowes Financial Management. "You should get a better return in the long run."

"The main benefit is that the managers have access to funds we can’t get access to as IFAs," he added, giving the example of Findlay Park American, which is only open to institutional investors.

"We tend to use multi-manager funds as a core holding within the portfolio. We use Henderson Multi Manager, the Jupiter Merlin funds, T Bailey funds and a few others."

"We look at the charges as the final thing. At the end of the day you get what you pay for."

Ben Seager-Scott, senior research analyst at Bestinvest, says that the flexibility of the multi-manager fund is a critical benefit.

"You’re paying for someone to choose the best managers for you," he explained.

"It’s well known that over the long-term the majority of your performance is driven by your asset allocation. What’s the point in having the best manager in a sector that’s doing badly?"

Seager-Scott says multi-manager funds offer another benefit over funds restricted to certain asset classes, as if one is doing poorly, a multi-manager can reallocate money between portfolios.

He commented: "Often the job of a manager is to beat an index, so they are very focused. If everything goes over the cliff they are happy to go over the cliff more slowly."

"So, if the outlook is for weak growth in equities, the multi-manager will trim his exposure to equities."

While multi-manager funds have the ability to protect against the downside, our data shows they underperformed their single-manager rivals in the down markets of 2008 and 2011.

However, the likes of FE Alpha Managers Martin Gray, John Chatfeild-Roberts and the Troy Spectrum team have all excelled during down-periods.

One of the main controversies over multi-manager funds is their expense and this is something that IFAs are well aware of.

Ben Yearsley, investment manager at Hargreaves Lansdown, said: "Some multi-manager funds are too expensive. There are some well over the 2 per cent mark, but you should be looking to the low twos in terms of overall TER."

He added that there are also some financial benefits relating to taxation, as investors are not taxed when a manager changes his holdings within an individual portfolio.

"For people who just want to buy a fund and forget about it this gives you a good option," he said.

Ben Seager-Scott claims the results of the poll may simply reflect the obsession with cheap products rather than any flaw in multi-manager funds.

"Investors are becoming increasingly cost-conscious and now you have the passive tracker funds and low-cost active funds that are becoming popular," he argued.

"You need to make sure you are getting value for money. If you are getting decent returns from the fund the charges are probably worth it. As ever you need to monitor your manager."

Graham Toone, head of research at AFH Wealth Management, said: "Given our expectation of low returns going forward if you have a TER of three per cent that’s a huge take-out."

Toone believes that the industry is becoming more cost-conscious in the current dampened economy, and the changes to IFAs’ fee structures necessitated by the Retail Distribution Review, set to come into force this year, may put pressure on the industry to lower costs.