The concept of multi-asset investing is to invest in a range of assets that, in theory, should help investors achieve less volatile returns.
Multi-asset funds tend to sit in one of four IMA sectors: Mixed Investment 0-35% Shares, Mixed Investment 20-60% Shares, Mixed Investment 40-85% Shares and Flexible Investment. So by taking a closer look at how each of these sectors has performed may help advisers select the right multi-asset product for their clients.
The Mixed Investment 0-35% Shares sector is the top-performing sector over the year to October 17, having delivered an average 2 per cent return. It is followed by the Mixed Investment 20-60% Shares sector, with an average return of 1.44 per cent.
However, over the longer term the IMA Flexible Investment sector is the outperformer, achieving an average return of 80.01 per cent across 10 years. The IMA Mixed Investment 40-85% Shares sector generated an equally impressive 78.16 per cent average return over the same period.
This was also the most popular sector of the four by net retail sales in August 2014, the latest figures from the IMA show. Net retail sales of the Mixed Investment 40-85% Shares sector reached £159m, ranking third behind the IMA’s UK Equity Income and Property sectors.
Net retail sales of the Mixed Investment 20-60% Shares sector were £89.8m in August this year, making it the fifth-most popular by net retail sales during the month.
Mark Rockliffe, head of intermediary sales at Heartwood Investment Management, explains the thinking behind multi-asset funds and why they are increasing in popularity.
“What we’re doing through multi-asset investing is seeking to exploit the opportunities from around the world by managing things like correlation benefits by having asset classes that perform well at different times from each other,” he notes.
“It’s not about being at the top of the tree over a six- or 12-month period, it’s about trying to match and map clients’ appetites for risk,” adds Mr Rockliffe. “Multi-asset investing enables that because of the diversification that sits in the portfolio.”
Ellie Duncan is deputy features editor at Investment Adviser
