Little attention is paid to the problem that world stockmarkets have become increasingly closely correlated. Gone are the days of building a diversified portfolio, with reduced risk, using a variety of loosely correlated equity markets. The index-hugging nature of many funds means that when important sectors do well or badly, risk is increased.This has had effects for investors, who have been hard hit by poorly performing funds. This has shifted investor priorities. Capital preservation and total returns are now of paramount importance. More attention is being placed on investments aiming to achieve the goal of potentially more stable returns from investment which is not wholly dependent on rising equity markets. This means re-examining conventional investment methodology and making alterations to strategy. If we believe low inflation and low interest rates are here to stay, then we must reduce expectations on returns. Equities will have a significant role to play in providing real investment returns for those with an appetite for the associated risk but it will be wise to consider diversification into other asset classes. The new style of fund management should take into account the full range of asset classes . Looking at the range of multi-manager and fund-of fund products on offer, whole sectors of markets are absent in almost all the Mom or Fof offerings. Specifically, commercial property, hedge funds, structured products, alternative investments and natural resources are not represented. There is a demand for innovation within the multi-manager sector, beyond the long-only, brand-name-dominated market. A few multi-managers have gone beyond equity and bond funds in their fund selection to include, for example, commercial property, byt they appear to have stopped there. This may be because even the well established names lack the experience of running truly multi-asset portfolios. We should remember the reasons behind adopting a multi-asset approach. It is not only in a quest to reduce correlation with equity markets but also to reduce sole reliability upon rising markets to do well. Adopting a multi-asset approach may mean we do not fully participate in an equity market upswing but that will not matter if more realistic investment targets have been set. From an investor’s perspective, the multi-asset approach provides a number of benefits. It offers prospects of more consistent, positive returns, less risk due to the diversified nature of the investment and less exposure to market volatility. The investor’s search for a multi-asset product will raise two challenges – access and expertise. The multi-asset approach is identical to that employed by contemporary discretionary managers, whose services are often restricted to the very wealthy. How is the average investor able to access that approach? Providers such as Close Finsbury are looking to provide an investment that includes the full spectrum of asset classes and asset classes that are not directly connected to each other in terms of likely performance. These include global government and corporate fixed interest, commercial property, structured investments, alternative investments, hedge funds, natural resources and cash. Such products offer investors more consistent returns, with reduced volatility. A sensible risk management process minimises risk as far as possible, yet still allows for opportunities to outperform an index or composite index. Pascale Moray is senior marketing manager atClose Finsbury Asset Management
Nationwide is launching new lower rate fixed rate mortgages.The new rates are available from April 22 and reflect current movements in the money markets.The two year fixed rate is available from 4.95 per cent from its previous rate of 5.19 per cent. The three and five year fixed are available from 5.09 per cent from […]
I am looking to release equity from my property as I do not have enough income or savings to maintain the lifestyle I want. Can you please explain my options?
Clerical Medical is offering a second tranche of its secure investment plan, a capital guaranteed product providing exposure to the FTSE 100. The plan has a five-and-a-half-year term and provides 110 per cent exposure to the FTSE 100. The growth of the index is averaged out over the last six months of the product’s term. […]
The Personal Range Individual Personal Pension
This guide from Johnson Fleming will take you through the required communication and also give ideas for additional actions that will ensure your auto-enrolment project is a success. As well as highlighting what is required from a system to ensure it is up to the tasks, an overview of the following is also provided: data validation; data categorisation; employee communication; opt-in process; opt-out process; produce contribution schedule; contribution reconciliation process; upload of member data to pension provider; upload contribution to pension provider; manage salary sacrifice process; enrolment process; re-enrolment process; and management of increased employee queries.
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