A more attractive option in a tough environment

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When you consider the difficult economic backdrop there’s little surprise that independent financial advisers are increasingly looking for multi-asset funds to deliver the desired combination of risk and return for clients. The challenge is choosing which portfolios will best suit their needs.

Justin Onuekwusi, a multi-asset fund manager with Aviva Investors, believes that such decisions must only be made after a thorough examination of the experience, size, resources and long-term track records of individual product providers has been carried out.

“The inflows tell us that clients are increasingly looking at multi-asset funds and a lot of products have come to market to meet that demand,” he says. “As well as the resources, we’ve been involved in this area for a quarter of a century and that puts us in a strong position.”

Its experience in the market has also reaffirmed its belief that a multi-asset approach can be hugely beneficial to investors in terms of providing a smoother performance – and potentially less downside risk than would be the case if all hopes were being pinned on just one area.

“There are three main benefits of multi-asset investing and the first one is diversification,” says Mr Onuekwusi. “This is often underplayed but such a fund is essentially trying to put different asset classes together to provide a smoother performance than a single asset class would provide.”

The second is asset allocation.

“Asset allocation tends to add more value than stock selection in a multi-asset framework as it is a key driver of risk and return,” he adds. “The last benefit is governance. With more regulation coming in, such as RDR you’re going to see more focus on what advisers tell clients and multi-asset funds can help to solve this problem.”

It’s also important to have long term time horizon if you want to make money from multi-asset funds, he maintains. “Too many investors get caught up in the short-term, whereas to maximise risk adjusted returns you really need a medium to long-term time horizon.”

The experience and knowledge built up over the past 25 years by Aviva, which currently manages £70bn in multi-asset portfolios, has all gone into the company’s Multi Asset range of funds, three of which were launched in November 2010 and a further two added in February, to target different risk appetites.

Named Multi-Asset I through to Multi-Asset V, the portfolios are run by the specialist Multi-asset team and offer access to a range of funds that invest in a global blend of assets such as equities, bonds, commodities, cash and property.