Multi asset funds have embedded biases. Why we need to know them…

‘Value investors do not believe stock market behave efficiently’

clock • 5 min read

If you are an adviser or paraplanner who recommends multi asset funds – whether this is in the form of an outsourced, or in-house centralised investment service, or whether you recommend multi asset funds generally – you need to know about their embedded biases, Paul Ilott writes…

Embedded biases are effectively the DNA of a multi-asset fund, and investment style is a key DNA building block. Style can make a tremendous difference to return patterns because individual styles perform differently throughout the economic cycle and under a range of market scenarios. Identifying style(s) can help us understand the likely market conditions that might benefit or hinder a portfolio's performance journey relative to peers. We might be more tolerant of periods of tepid performance when the prevailing market backdrop isn't conducive to the portfolio manager's style. Conver...

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