We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

Features

Twitter board

Follow us
  • My week on Twitter 🎉: 2 Mentions, 3.3K Mention Reach, 5 Likes, 6 Retweets, 7.76K Retweet Reach. See yours with… https://t.co/IZfviidt4H17 hours ago
  • Friday View: Trustees feel the heat over climate change - bankers' pensions back in black - TPR suspends trustee -… https://t.co/kUKa8QUF9w3 days ago
  • Increased regulatory oversight will be risk-based, TPR keyperson will meet schemes deemed riskier several times a y… https://t.co/wUiKPGESaU5 days ago
  • Lesley Titcomb, TPR chief executive says change is on its way, the regulator will increase oversight between valuat… https://t.co/Wu8Pv6TfqS5 days ago
  • Join us and @AonRetirementUK on the 4th of July at the luxurious Victorian Bath House featuring educational presen… https://t.co/r1abr8Qls06 days ago
  • DWP wants trustees to feel the heat over climate change https://t.co/bs25DvyWGF #ESG #climatechange https://t.co/dZEXB0g8a46 days ago
  • My week on Twitter 🎉: 3 New Followers. See yours with https://t.co/mCw3VcMQGw https://t.co/3kEHNr3xyz7 days ago
  • Friday View: Heathrow's £325 million buy-in - Auto enrolment for the gig economy - Brunel opts for ACS structure -… https://t.co/vsnML1Vzb510 days ago
  • Pimlico Plumbers- Could gig economy workers be auto enrolled? https://t.co/qgrlWxMUW8 #gigeconomy #autoenrolment… https://t.co/wnDH18iPxG10 days ago
  • RT @eVestment: Workers in the #UK are open to increasing their retirement savings and tend to place greater emphasis on workplace #pensions…11 days ago
  • The June issue of portfolio institutional is now out: Featuring our take on #carillion and lessons for trustees as… https://t.co/yC2PNgoaPr12 days ago
  • RT @PensionsSion: Aon's very own John Belgrove shares his views in this piece. Worth reading... https://t.co/VYEJWjAU3z12 days ago
  • My week on Twitter 🎉: 2 Mentions, 3.29K Mention Reach, 2 Retweets, 3.27K Retweet Reach. See yours with… https://t.co/MeoES7Ch3L14 days ago
  • Friday View: South Yorkshire hedges pension risk- Recruitment execs face prison over pension scam - Johnston Press… https://t.co/9fV8Z48WtF17 days ago
  • RT @cfjescott: A recent piece of mine on the @CMAgovUK investigation into investment consultants in @portfolio_inst #investment https://t.c…19 days ago
  • Our ESG Roundtable: Better Long-term outcomes? Available to download now https://t.co/o7T8kWSwWY https://t.co/oHs4VlRK9E21 days ago
  • Active vs Passive : In 2016 investors withdrew around $285bn from active funds and pumped almost $429bn into passiv… https://t.co/tjpxhTxW5Z21 days ago
  • RT @WhtstheDiehlio: .@AitkenRL spoke with @graniteshares CEO Will Rhind about the ongoing active vs. passive debate. Check out their though…21 days ago
  • Green is the new black. A record sum is expected to be raised under the green bond banner this year, but is it doom… https://t.co/JYP8k0ZfZk23 days ago
  • Our Cover Story! Property: Solid Returns - Low gilt yields are forcing schemes to pile into bricks and mortar. Mark… https://t.co/9nyjFp0Z4R23 days ago

Strategy

Picking a winner

Picking a winner

Charlotte Moore
Friday 2nd March 2018

The multi-asset success story has led to the birth of an array of funds under the same all-encompassing banner. With so much choice and varying degrees of performance, Charlotte Moore asks if they are too heterogeneous to be helpful.

“After all, pension schemes are, by their very nature, multi-asset funds.”

Chris Stevens, bfinance

Multi-asset funds have been one of the great success stories of the past decade. Spooked by financial market volatility during the global financial crisis, institutional investors have found their promise of equity-like returns with reduced volatility irresistible.

This popularity has inevitably attracted new market participants. There is now a bewildering array of different strategies, united by their use of multiple asset classes and little else.

At one end of the spectrum are more traditional balanced managed funds, while esoteric quantitative strategies exist at the other. The dispersion of performance is equally broad.

Such a heterogeneous approach to multi asset makes it harder for schemes to select the right fund which matches their particular characteristics and investment goals.

Such diverse performance also means there is no guarantee the strategy will meet its target.

Making your mind up

The only way to find the right fund for a particular scheme is to look at every fund in detail. Paul Berriman, global head of Willis Towers Watson’s funds business, says: “It’s important to understand the investment strategy as well as return target for each and what risk measures are being used.”

Focusing on the return target and the approach to risk will help the pension scheme to understand whether a fund will deliver to a particular scheme’s investment targets, he adds.

This broad choice raises the question of how useful these funds can be to institutional investors and how they should go about selecting the right fund. To make the task easier, it helps to group similar strategies together.

Within the global multi-asset fund universe, there is a group of diversified inflation funds. Kishen Ganatra, senior manager and research analyst at Mercer, says: “These funds are aimed at the US retail and defined contribution (DC) market so are not particularly relevant for the UK.”

The second group are risk parity funds – which aim to give an equal risk weighting to each asset class included in the strategy. This group is also aimed at the US market so is not particularly relevant for UK institutions.

The two classes which are the best for UK institutional investors are core and idiosyncratic strategies. Ganatra says: “Core strategies are the most traditional and straightforward. The most naïve version is a balanced fund.”

Page: 1 2 3
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!

Friday View

Friday View

How investor action helps cut CO2 emissions