PARTNER INSIGHT: The rise in demand for multi-asset investing is largely driven by the need for a simple one-stop solution for investors, says Frank Potaczek, head of UK proposition at Architas
A multi-asset fund allows investors access to a highly diversified portfolio while targeting specific outcomes. Multi-asset funds offer a complicated portfolio presented in a simple-to-understand way. As the investment world has become more sophisticated the classification of asset classes has expanded greatly. A true multi-asset fund should be crafted to have the ability to access all these areas to help meet the fund objectives and the outcomes needed by clients.
And provide much needed diversification. The investment universe, particularly the fund of funds space, has expanded greatly in recent years, and investors can access global equities, bonds, property and even some more esoteric assets via a host of convenient packaged products. Consequently, there is a tremendous range of investment opportunities available, regardless of risk appetite or investment goals. However, with a growing range comes growing complexity as providers seek niche areas of the market to set themselves apart from their competitors.
One of the key benefits of using multi-asset funds is the smoother investment journey they should provide and not just the total performance. You need to consider what level of volatility you may be prepared to tolerate in your portfolio? At a time when geo-political concerns are on the rise and volatility has returned to markets, protecting portfolios from large market spikes is possibly more important than ever.
Making and managing a multi-asset fund
You need to look at putting together a whole host of asset classes with as little correlation as possible while fulfilling a specific risk return profile. You are looking to put assets together that have a certain risk profile and certain reward profile. The assets then need to be monitored on an ongoing basis to ensure they are doing what they should and delivering within the risk boundaries set for the fund. A good multi-asset manager will then look to diversify away other risks within a portfolio such as credit risk, market risk, currency risk and interest rate risk. This is what you the investor should be getting for the fee you pay for a multi-asset fund.
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