Roundtable

Multi asset roundtable

A diversified approach A look at the many reports and press releases sitting in my inbox points to multi asset being one of the hottest topics in the investment world right now. It’s not a new concept, but its popularity is growing. Some of the world’s largest institutional investors, including Blackrock, HSBC and Janus Henderson, […]

October 2017

A diversified approach

A look at the many reports and press releases sitting in my inbox points to multi asset being one of the hottest topics in the investment world right now. It’s not a new concept, but its popularity is growing. Some of the world’s largest institutional investors, including Blackrock, HSBC and Janus Henderson, have launched multi-asset funds in the past 18 months. The births of these products reflect the times that we are living in. They are marketed as funds that provide better capital protection at a time some fear another slowdown is on the horizon and expect further volatility linked to ongoing political events. One such issue is the uncertainty over the terms of the UK’s exit from the European Union (EU), where there is little sign of a breakthrough in the negotiations. Then there is the stand-off between Donald Trump and Kim Jong-un. Funds that offer protection or growth are proving popular as many pension schemes have taken on more risk in the nine years since the financial crisis. With the cost of money negative in some areas and the risk-free rate collapsing to 1.4% at the time of writing, many schemes have shifted their strategies to find the income needed to pay member benefits. This has seen the value of the industry more than treble in nine years. At the end of 2016, multi-asset and multi-manager funds were worth £127.2bn, up from £34.8bn in 2007, the Investment Association says. Diversity is one attraction as investors look to spread their risk, by following strategies that lean towards certain equities or incorporate alternative assets. It appears that the traditional 60%/40% equity to debt portfolio is falling out of fashion. Is this a result of asset managers selling pension schemes fear or greed, or are they just giving the market what it wants? This is a growing market and with some big questions surrounding it we brought a trustee and a pension scheme together with asset managers and consultants to get under the surface of this area of the market. Among the items on the agenda was discovering what the attraction of multi asset is and how best to create such a portfolio?

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