THE LAUNCH OF Skandia's Hong Kong mutual fund range last week was evidence of the global ambitions of the diversified Swedish insurance group. All the company's business is now in long-term savings investments, typically investment-linked insurance products with an element of tax shelter or deferment. Last Tuesday, Skandia launched a package of retail funds in Hong Kong under its name, but managed by selected third parties. The 13 funds in the Skandia Global Funds sub-advised package are already on sale in Europe, the United States and Latin America and are distributed through financial advisers. Skandia Global Funds chief executive Christian Thwaites said it was difficult for any financial services company to outsource fund management, but the result was a broader choice and better product for customers. 'You need the resources. You need analysts and need experience at looking at managers. Very few companies actually have that. But the emotional barrier is higher than the technical barrier. 'As a fund sponsor, you have to make a very difficult decision to do this. You have to say: 'We are good in some areas but not all, and we are going to find the best external managers'. 'In this industry . . . that is very difficult for a large fund manager to say.' Skandia screens managers with its teams of analysts, most of whom are based in Southampton, Britain, and Stockholm, Sweden, supported by others in Zurich, Berlin and Connecticut. Once a manager takes on the role of running a Skandia fund, they are required to open up their operation to the analysts. Any buy or sell decision can be questioned, even for efficiency or style reasons. Managers could be changed for a variety of reasons, Mr Thwaites said. Skandia dropped Janus as a manager in April last year for poor performance. In another example, a fund company was dropped after the departure of a key manager and his team. 'The drivers of the decision are very diverse. In some cases the individual is very important. With other managers, it is more of a team approach and we would be less concerned about the departure of an individual.' Skandia applies what it calls a '4Ps' approach to assessing and reviewing its fund managers: it examines each manager's philosophy, process, people and performance. Mr Thwaites said distribution through financial advisers provided an open investment platform for investors to choose from, with the fund management side of the equation monitored and researched by Skandia. Until two years ago, the Skandia research teams operated largely locally, providing research and analysis to support their regions and local operating companies. Mr Thwaites and his management team decided it was time to globalise with the launch of the Dublin-domiciled Skandia Global Funds family of products. Ahead of the launch in Europe, the research operation was centralised, bringing together its diverse talents and experience. 'Our global research team is unique. Our analysts have been managing and researching managers collectively for many years. Now, they make a recommendation about a manager and about how the funds should be run. 'We have a very broad universe of managers we can do research on and we do it exhaustively. We literally do it on a daily basis - looking at how the manager operates the fund for us.' The fund manager analysis Skandia carries out is a world removed from crunching historic performance numbers. It is akin to being in the managers' premises looking over their shoulder. 'The depth of their research comes from meeting with managers, understanding their philosophy and constantly getting exposure to new styles. With managers of our funds, the analysts have access to every trade and purchase made every day. 'We can really have effective and ongoing checks and balances as to how the manager is doing.' The funds launched in Hong Kong offer exposure to equities globally, and to stock markets in Europe, the US, Japan, and the Pacific. There are also three bond funds and several with mixed holdings of bonds and equities aimed at delivering income and growth. Mr Thwaites said some managers were achieving good performance despite the past three years of dismal global equity market returns. 'I think the managers who gambled their reputations on a very narrow level of expertise, be it US equities or Asian equities are getting hammered, but the ones with different areas of expertise like bond managers, fixed income, value managers have had some of their best years ever.' Over the 12 months to January 31, the Skandia-Global Bond Fund returned 17.79 per cent, and the Skandia-Alliance Capital Global Equity Fund returned minus 24.47 per cent. The Skandia-PIMCO US Total Return Bond Fund returned 8.2 per cent between April 30 last year and the end of January. Christian Thwaites 1981: Graduated from the Univer sity of London. Senior fund manager, Simon Montagu and Company. 1988: MBA, Harvard Business School. 1989: Vice-president and head of mutual funds at Aetna Re tirement Services. 1995: Senior vice-president of American Skandia before becoming chief executive of Skandia Global Funds.