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Special Report

Multi-Asset Funds - July 2012

Published by Money Management | Jul 03, 2012

With markets still heading every which way and the euro crisis raging on, advisers and investment managers have no easy job at the moment. The advantages of diversifying are really being born out.

In step multi-asset funds, offering diversification across a wide range of assets at lower costs than more bespoke solutions, like discretionary fund managers.

While multi-asset funds are popular, their perceived popularity is dwindling. Research from Legal and General showed that while 50% of those asked were invested in multi-asset funds in 2011, they expected this to reduce to 42% in the following 12 months.

Despite this, those invested in the funds in 2012 actually rose to 51%, although expectations are still low for the next 12 months, to 41%.

Regardless of these perceived fluctations in holdings in multi-asset strategies, the funds remain more popular than most. The L&G findings showed that more people are invested in multi-asset than multi-manager and property, and only marginally less than fixed income.

Multi-asset funds are also expected to be used increasingly by self-directed investors who find themselves without an adviser post RDR. Research from F&C found that those with £25,000 to £70,000 in liquid assets are 82% likely to select their own investments, compared to just 30% of those with £1m or more to invest.

This portion of the lower net worth market alone represents £110bn of total assets to be self-directed, showing just how big the market could be.

Those with smaller funds who do not feel proficient enough to fund or stock pick will likely use a one-stop shop solution, such as multi-asset funds.

But it’s not just investors that will use these funds, advisers are adopting them more and more, both for those with lower assets or as a core holding for higher-net worths.

With so much demand, the only task left is to pick the right fund - no mean feat. With many providers moving into the space and each fund adopting different strategies, investors and advisers need to lift the bonnet to really

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