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The rise of multi-asset investing

10 months ago
Frank Potaczek, head of UK proposition, Architas

A multi-asset fund allows investors access to a highly diversified portfolio while targeting specific outcomes. Multi-asset funds offer a complicated portfolio presented in a simple to understand way.

What is behind the rise in multi-asset portfolios?

The rise in demand for multi-asset investing is largely driven by the need for a simple one stop solution for investors, as the number of investment strategies that are available increases.

As the investment world has become more sophisticated the classification of asset classes has expanded greatly. A true multi-asset fund should be crafted to have the ability to access all these areas to help meet the fund objectives and the outcomes needed by clients. And provide much needed diversification.

The investment universe, particularly the fund of funds space, has expanded greatly in recent years, and investors can access global equities, bonds, property and even some more esoteric assets via a host of convenient packaged products. Consequently, there is a tremendous range of investment opportunities available, regardless of risk appetite or investment goals. However, with a growing range comes growing complexity as providers seek niche areas of the market to set themselves apart from their competitors.

Multi-asset funds offer access to a vast array of asset classes but in a more dynamically managed way than was previously offered by managed funds.

One of the key benefits of using multi-asset funds is the smoother investment journey they should provide and not just the total performance. You need to consider what level of volatility a client is prepared to tolerate in their portfolio? At a time when geo-political concerns are on the rise and volatility has returned to markets, protecting portfolios from large market spikes is possibly more important than ever.

Making and managing a multi-asset fund

You need to look at putting together a whole host of asset classes with as little correlation as possible while fulfilling a specific risk return profile. You are looking to put assets together that have a certain risk profile and certain reward profile. The assets then need to be monitored on an ongoing basis to ensure they are doing what they should and delivering within the risk boundaries set for the fund.

Risk and reward: how to select the right multi-asset for a client?

The right multi-asset fund is one that is well diversified and remains within a particular volatility boundary with an expected level of return. A good multi-asset manager will then look to diversify away other risks within a portfolio such as credit risk, market risk, currency risk and interest rate risk. This is what investors should be getting for the fee they pay for a multi-asset fund.

For more information, call us on 020 7562 4900, calls may be recorded.

Frank Potaczek

Head of UK proposition

Frank is Head of UK Proposition for Architas and oversees the existing fund ranges, together with managing future product and proposition strategies. Experienced in both the buy and sell side, previously he has held senior roles at Defaqto, Intrinsic Financial Services, Close Brothers Asset Management, Legal & General Investments and Threadneedle Investments.


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