The company has a six-year track record in absoiute return multi-asset investing with an institutional fund, Baring dynamic asset allocation fund.
The new fund is managed by Andrew Cole, who has over 30 years’ investment experience, including 23 years in Barings fixed income and multi-asset teams. He is a member of Baring’s global macro research and asset allocation team, and chairman of that group’s risk committee.
Asset allocation is crucial for Cole and his team. They expect 75 per cent of returns to come from long-term strategic or short-term tactical asset allocation, while the other 25 per cent will derive from active management within asset classes.
The fund will have no benchmark index and will invest in equities, bonds, derivatives and alternative asset classes such as commodities, property and private equity.
Exposure to growth assets will be increased in strong markets, while more defensive assets will be held in uncertain markets. Short-term tactical plays will capture returns when they are available and reduce risk when the market deteriorates.
The portfolio is constructed initially by analysing each asset class to determine what the long-term trend will be. Volatility and correlation with other asset classes will also be considered.
The Baring multi-asset team is starting to be more positive on riskier asset classes such as equities. They are beginning to move away from defensive positions in short-dated bonds, gold and cash. Investors will benefit from this strategy when the market recovers, but not as much as a pure equity fund.