Matching a client's risk appetite, diversification, asset allocation and using multi-asset funds in retirement planning are all subjects addressed by RLAM head of multi-asset Trevor Greetham in Professional Adviser's series of five short video interviews, all of which can now be accessed from the same place here.
In Multi-asset in retirement planning, Greetham argues pension freedom and the removal of the requirement to buy an annuity means "planning for retirement now means planning through retirement". "Income is a bit of a charged word," he adds. "To me income in retirement is money you can spend. It is not necessarily ‘natural income' generated from a high-yield bond or a high-yield equity - it is best thought of as ‘drawdown'."
In Grading multi-asset portfolios to match risk appetite, Greetham puts forward the view multi-asset investing should be about achieving the best return for a client's tolerance rather than letting the "risk tail wag the dog". One of the benefits of multi-asset, he says, is the ability to create a range of portfolios to suit different risk appetites through "quite marginal changes" in the proportions of "the riskier growth-seeking assets and store-of-value assets".
In Diversifying to counter market shocks, Greetham explains how investing a portion of a portfolio into assets that perform better during negative market periods can help shift the odds in investors' favour should the unexpected actually happen.
"You can try to react to events in certain ways and there are certain rules you can follow that help you to stack the odds in your favour," he says. "We have constructed our portfolios for what we think is going to happen next - but we want assets to be sitting there waiting for the unexpected. Diversification really matters."
In 'Clocking' different stages of the economic cycle, Greetham suggests adopting a suitable investment strategy for different stages in a market or economic cycle requires understanding what drives asset classes. "Depending on where we are in terms of global growth and global inflation cycles, we tilt our portfolios towards either equities or bonds or commodities or cash," he says.
"What we find is, for a multi-asset portfolio to be successful over the long run, you need to have all those asset classes in the mix to start with. Then, if you are analysing what is happening to growth and inflation, you can stack the odds in your favour." Greetham goes on to explain how he and his team are assisted in this aim by reference to what RLAM calls the investment clock.
In Multi-asset's popularity no ‘flash in the pan', Greetham argues the regulatory environment for financial advisers means the success multi-asset has enjoyed since the financial crisis will continue. "In the early years after the financial crisis, there was a sense in some fund management organisations that multi-asset was going to be a bit of a flash in the pan and that, before long, everybody would get back to buying pure equity funds," he says.
"What has changed - and changed for good - is the regulatory environment for financial advisers and the way that is feeding through into how end-customers think about investing,. Most clients are unlikely to emerge as pure equity investors on the risk spectrum and it is here multi-asset becomes very important - particularly the fact you can offer a range of solutions with different risk profiles but also with quite similar repeatable outcomes."
Joining London team
Previously at Old Mutual Wealth
Will introduce a cap on cost of care
Inertia has become a key policy mechanism