Leading fund manager Schroders and ratings agency Standard & Poor's are to launch a new fund-of-funds service globally for financial institutions under an exclusive, multi-year initiative. A statement issued by the venture partners said for the first time, through the Schroders/Standard & Poor's service, financial companies will be able to offer their investors access to Standard & Poor's fund research capabilities combined with Schroders' investment skills. In the joint initiative, Standard & Poor's will conduct fund research and analysis and will recommend funds for selection. Schroders will provide asset allocation, portfolio construction, risk management and performance measurement. Schroders' international wholesale network will also provide marketing and sales service. The global fund of funds market is expected to grow by up to 30 per cent a year to more than US$700 billion by 2007 as investors turn to best of breed products, which also offer greater diversification. The Schroders/Standard & Poor's service will be a sub-advisory service. It will provide an effective turn-key solution through which brokers, banks and other financial institutions will be able to offer custom-made fund-of-funds portfolios combining Standard & Poor's premier fund research and analysis with Schroders' unique in-house risk management tools. Branding for the sub-advisory service will be flexible. The distributor will be able to choose whether to use a combination of Schroders and/or Standard & Poor's brands, or whether to market on a private label basis under its own name. Commenting on the launch of the service, Schroders group managing director Retail Massimo Tosato said: 'Investors are looking for cutting-edge best-of-breed products. Our service will deliver this through a combination of the wealth of Schroders asset allocation and risk management experience with Standard & Poor's superior, independent fund research. We look forward to working with our distributors to develop products tailored to their markets' needs. 'This service represents a strategic diversification of Schroders' business into a fast growing area of the savings market. Most importantly, it will enable us to offer our clients a broader range of investment solutions.' Standard & Poor's executive managing director Paul Aaronson said: 'Investors have long relied on Standard & Poor's independent fund research, analysis and advice for their portfolio decisions and we are delighted to now offer, along with Schroders, a customised value-added service that meets the specific needs of fund-of-funds' distributors. This arrangement between Schroders and Standard & Poor's will be a powerful combination in a rapidly growing marketplace.'