View more on these topics

Why have multi-asset funds taken so long to grow?

Ben Yearsley

Multi-asset investing has been the best thing since sliced bread in the investing world since, well, sliced bread was invented. The problem is, no one has actually told potential investors this fact, and so the amounts invested in these funds by private clients is surprisingly low.

Multi-asset funds have in the main been slow to catch clients’ imaginations, with the odd exception such as the Artemis Strategic Assets fund, managed by William Littlewood. However, this fund has been promoted largely on the back of the highly talented Littlewood, and not on the back of the multi-asset approach – I imagine very few investors in this fund realise they own a multi-asset fund.

The premise behind multi-asset funds is simple – the manager has the flexibility to invest proportionately in those asset classes thought most appropriate at that point in time.

In theory, investing in a multi-asset fund with a manager who can actually time markets would mean no other fund was needed. Moving in and out of equities, property, bonds and cash at the correct time in the cycle will make a happy investment bunny.

The clue is whether managers can time markets and asset classes. I would hazard a guess that most think they can time markets, but probably cannot.

One of the reasons why multi-asset funds have been slow to take off is because there is no specific sector for these funds. Multi-asset funds can be found primarily in the Flexible and Mixed sectors, making it more difficult to find and compare them.

I am not sure whether those investment groups with offerings in this area are lobbying for a specific sector, but it would amaze me if they were not.

It is, however, a chicken and egg situation as there will not be a new sector until there are sufficient funds and assets, but while it is difficult to find the funds, significant assets will not flow into them.

An obvious question to ask would be why is multi-asset investing so popular in the world of corporate pensions and not in the private client world? The simple answer to this is surely risk.

Corporate advisers seemingly obsess about risk and having exposure to all asset classes, regardless of whether it is the right or wrong time.

Private clients are less obsessed with risk and more interested in return. By their nature, over the short term multi-asset funds rarely feature at the top of the performance tables.

However, over the longer term, if markets and asset classes are timed correctly – at least some of the time – then these funds should naturally gravitate towards the top.

So, should investors consider investing in the sector? The simple answer is ‘yes’ for those wishing to take a more hands-off investment approach.

In other words, if you want to invest in just a handful of funds, but you want a diversified approach with exposure to most main asset classes, then multi-asset funds could be the answer.

Funds to consider include Baring Multi Asset fund, managed by Andrew Cole, the Rathbone Multi Asset Strategic Growth fund run by David Coombs, and the Artemis Strategic Assets fund.

Ben Yearsley is the head of investment research at Charles Stanley Direct

Recommended

2

FOS: IFAs doing a ‘pretty good job’ on complaints handling

The Financial Ombudsman Service says IFAs are better at handling complaints than large financial organisations but it still backs the implementation of the Retail Distribution Review to eliminate commission bias. Giving evidence to the Treasury select committee today, FOS chief executive Natalie Ceeney said IFAs were better, on average, at handling complaints than large businesses […]

3

Aegon reveals RDR adviser charging plans

Aegon has set out its RDR adviser charging proposition which will see its current income drawdown plan replaced and the closure of five of its funds. The company will be facilitating adviser and consultancy charging on its group personal pension for new schemes, its flexible personal pension, a new income drawdown plan, its wealth management […]

Ex-Barclays chief calls for tougher rules on interest rate swaps

Former Barclays chief executive Martin Taylor has called for interest rate swaps to be held outside the ring-fenced banking proposals. Chancellor George Osborne has asked the commission to consider whether simple derivatives, such as swaps, should be held outside the ring-fence in light if recent misselling scandals. In July, HSBC, Royal Bank of Scotland, Barclays […]

2

Ex-PosSol chief Reeve joins 2020 Innovations Limited

Accountancy and tax support firm 2020 Innovations Limited has appointed former Positive Solutions chief executive Jim Reeve as a director. 2020 says Reeve’s new role will see him chair the firm’s board and focus on developing strategic with product and service providers. Reeve (pictured) quit PosSol in February and launched consultancy firm Signature Private Clients […]

Thumbnail

Employer iPMI responsibilities could continue to escalate, says Jelf

New laws in Dubai will put the burden of providing international private medical insurance (iPMI) firmly on the shoulders of the employer in order to maintain the country’s leading healthcare facilities. With 10,000 UK nationals having moved to the country since 2007 and only 16.5 per cent of the total 8.2 million people living there being Emiratis, Jelf Employee Benefits believes this move was inevitable and employer responsibilities could continue to escalate in future.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com