Investors are rushing to funds with attractive portfolios, as billions of dollars flood multi-asset companies.
However, the key decisions on how to split the investments between different types of assets like bonds, shares, or property are difficult to make even for experienced investors.
This is a major reason why there is a growing interest in the multi-asset investment market where a professional manages funds on behalf of the client.
These funds are one of the most popular for investors and pensions savers, with many new portfolios launching to capture the stream of investment in this growing market.
However, some financial advisers and fund analysts have expressed concerns about the quality and track record of some of the new multi-asset investment companies, as they may not be at par with similar funds.
Nevertheless, leading multi assets companies like SimCorp are providing advanced integrated systems for the world’s managers, enabling investors to get a real-time overview of their entire business in one system.
Many asset management companies now offer several attractive multi-asset products, amidst the fierce competition to hire the services of asset allocation experts, skilled in adjusting proportions of client’s investments in different markets to maximise returns with minimal risks.
The average investor is offered a higher prospect for profit compared to traditional stock investments or equities that are set against certain benchmarks.
Multi-asset funds are also a reasonably safe haven for small time investors, as it is a convenient “set-and-forget” (as the financial industry refers it) kind of asset and can provide the core of a portfolio.
Analysts like Bella Caridade-Ferreira who runs Fundscape, a research firm, believes the benefits of multi-asset investment have become clearer to people over the past one or two decades, and they are beginning to shift focus away from the stock market.
Financial experts generally consider the trend as a positive signal for investors, as the focus of investment are on assets with potentials for returns rather than on popular or fashionable financial products.
However, the concept of multi-asset investment is not entirely new. A former and similar model called the ‘balanced fund’ held fixed proportions of assets and equities. Other products mimic this model, but the multi-asset investment system has appealing prospects for modern investors.
Why Multi-Asset Investments Have Become Popular
Multi asset funds are now popular in part because it was an instinctive reaction to the global financial crisis when many investors were left disappointed to realise that their funds were not insulated, even though the stock managers tried to coat the situation with some stock gibberish.
The crisis also forced a period of reflection for stock managers as they tried to review what the customer really wanted. The discovery was that clients don’t really care about the financial jargon concerning what market is performing or not. They are simply looking forward to becoming richer from their investment.
So, fund managers are now more involved in investment risk controls, making the big investment calls for the client, and betting on certain stock markets and asset categories over others.
They also move funds around when they see fit, and in response to changing economic fortunes. Most of the multi-asset funds split client investments between shares, bonds and property. Others will further invest in alternative prospects like gold.
Other funds don’t invest directly in shares, bonds or property; but purchase units in other funds called ‘fund of funds’ or ‘multi-manager.’ It offers the advantages of accessing more asset management expertise and higher fund diversification. But the charges on these portfolios are high.