Advisers are placing performance ahead of income generation when it comes to their choice of multi-asset funds, new research suggests.
According to a Royal London Asset Management survey of 56 advisers, total return and performance are the most important factors when selecting multi-asset funds, as opposed to income generation.
Advisers ranked income generation as the second-least important factor, just ahead of brand, when doing due diligence.
The firm surveyed advisers during RLAM’s multi-asset roadshow last year.
Head of wholesale Phil Reid says he is surprised by the results.
He says: “I’d have thought income would be high [in the ranking] because everyone talks about income, with interest rates so low and people living longer, but actually it has come out a lot lower than people had said.”
But Yellowtail Financial Planning managing director Dennis Hall says advisers need a clearer vision of the mandate of multi-asset funds before picking them, and income should not be the main driver of choice.
He says: “You can’t solely focus on income-producing shares but look at total return. There’s a very strong case to look at total returns rather than income generation unless you are very wealthy.
“The problem with multi-asset funds is knowing the remit and the fundamentals rules. In the Vanguard LifeStrategy range of multi-asset you know exactly what the remit is and which funds you are into.”