Partner Insight: Why have multi-asset funds proved popular with advisers?

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Partner Insight: Why have multi-asset funds proved popular with advisers?

Advisers have taken to multi asset investments and the 2019 Fidelity/Professional Adviser survey explains why, says Aamina Zarfar.

The majority of advisers favour multi-asset investing to generate wealth for their clients, according to the latest research. 

A survey commissioned by Fidelity quizzed a mix of IFAs, restricted advisers, paraplanners and discretionary wealth managers and found that a whopping 91% of them recommend multi-asset products to their clients. This trend is set to rise with 34% of advisers claiming that they expect a slight increase in their use of multi-asset products as clients review their finances and are able to direct more investment that way. 

The research also found that 7% of advisers expect a significant increase, which is due to their clients retiring soon and needing to have their investments in a relatively safe place. The trend was noted by Lesley James, director at Marlow-based Simplified Money. She said: "We see multi-asset passive funds as the starting point for every portfolio. The evidence continues to show that low-cost passive funds perform better than the majority of equivalent active managers. Multi-asset then provides the added diversity, predictable risk levels and in-built rebalancing. All for very low fees. 

"At Simplified Money we target the mass affluent and most of our clients are very well served with this approach."

Aj Somal, chartered financial planner for Birmingham-based Aurora Financial Planning, said: "We also recommend multi-asset to our clients, as it enables clients to obtain a widely diversified portfolio in a number of segments. I can see the uptake of these multi-asset products increasing in the next few years, as clients become more aware of these products.  

"However, the pitfalls can be potential OCF charges on these products which drag down returns, so they have to be compared with alternative investment strategies." Interestingly, 50% of advisers said they expect their use of multi assets to remain the same, due to the fact they already use this approach for 90% of clients. 

This comes as advisers have been increasingly turning to multi-asset allocation over the past three years, with 30% saying their use has increased slightly and 23% claiming their use has significantly increased.

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