The Case for Multi-Asset Investing
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Multi-asset funds are quickly becoming the investment of choice in the UK. In fact, they are now among the most popular investments for ISAs and Pensions.
What Are Multi-Asset Investments?
Multi-asset investments are professionally-managed solutions that invest in a broad range of assets such as equities and bonds, all in a single investment. Some managers also build their funds by buying units in other funds, these are known as “multi-manager” or “fund of funds”.
All multi-asset approaches offer a greater degree of diversification as opposed to investing in a single asset class. Many investors look to multi-asset investments to provide a lower-risk solution than, for example, a pure equity fund, but with greater prospects for growth than a pure bond fund.
Investing in multi-asset funds also means that you are able to take advantage of the skills and resources of expert fund managers. These managers focus their time on researching markets and economies, so they can choose the assets they see as offering the best potential for growth. And, as markets change, they will sell some assets and buy others, to put the fund in what they believe is the strongest position at the time and for the future. This means you are never tied to the gains or losses of a single asset. Instead, you have a fund manager whose sole job is to create a steady path for growth in all types of market.
Why Are Multi-Asset Investments So Popular?
Multi-asset investing has been growing over the last decade, but it has exploded in recent years and 2015 seems to have been a tipping point, where it is now mainstream for many investors, financial advisers and fund managers.
This increase in popularity can be assigned to:
- Continually low savings rates offered by banks and building societies
- Recent market volatility, caused by uncertainty over Brexit
- Last year’s pension freedoms, where savers are now able to keep their money in the markets during retirement, but need to manage volatility according to their lifestyle
There are many more reasons, but these three key factors have created a perfect storm for multi-asset investing, with savers now seeking good, but sustainable growth rather than expecting endless high growth in today’s markets.
What Are The Benefits?
The main benefit of multi-asset investing is diversification, which lowers risk and reduces volatility. Multi-asset funds can smooth out choppy markets and, as you’re not tied to a single stock, the chances for loss are lessened. There will always be winners and losers in the markets, so choosing a diversified approach helps you and your financial adviser avoid the guesswork.
Multi-asset funds also offer simplicity. A multi-asset fund is a ‘one stop shop’ for your investments, where you choose your fund once and let the investment professionals take the strain. As they’re diversified and managed for you, there’s no need to continually monitor asset allocation, watch the markets or research individual companies.
In addition to the performance and risk profiling benefits, multi-asset investing is often less expensive than trying to build a diversified portfolio yourself.
Finally, multi-asset investing isn’t just for those seeking growth to reach a financial goal, it’s also a beneficial strategy for investors seeking a steady income in retirement. Multi-asset income funds are managed for exactly this purpose and, just as in growth funds, they use diversification to smooth returns – which is crucial when a fund is a your main source of income.
What Are Your Options?
We work with some of the best fund managers in the world to deliver multi-asset solutions to investors. Our Managed Portfolio Series is managed in partnership with Schroders, Close Brothers and SEI. These exclusive funds are fully-diversified, multi-asset investment solutions, mapped to five risk profiles. All you need to decide is your attitude to risk and which manager’s investment style is most attractive to you.Learn More About Our Portfolios