Advisers use multi-assets in two different ways, according to Rod Aldridge, head of UK retail distribution for Baring Asset Management.
Mr Aldridge said: “Some advisers use multi-assets as the core of their client’s portfolio. So what we see is advisers who will say, okay we are financial planners, we get involved in helping our clients construct their investment portfolios, but we are not investment managers ourselves, that is not really what we do. Some of those companies will use multi-asset funds as the core of their client portfolios, they may blend three or four different multi-asset type products at the core of their portfolio and so what they do is buy specialist products to give their client exposure to certain areas that are relevant to them. This may involve income-generating assets for income-type clients, or it may involve emerging markets assets for people that are more growth orientated.”
On the flipside, he continued: “We have a lot of advisers who manage their own portfolios, so they get much more involved in the overall asset allocation and underlying fund selection for their clients. At the moment it is fairly evenly balanced. There are other multi-asset providers who are possibly trying to provide more of a one-stop solution for advisers.”
In addition, there’s plenty of room for expansion. When asked: do you feel that the market is saturated with multi-asset funds? 73 per cent of respondents said ‘no’, only 26 per cent said ‘yes’.
Mr French agreed that activity should increase, because “people tend to follow what other people are doing”, but the format and structure of how these funds are put together can be expected to change.
He added: “The desire for advisers to seek support is going to be a long standing one. We can say that with confidence because this is what we have seen in the US and Canada, for example, which has gone through this fee model, so we have seen the other side of this in different markets.”
Mr French added that client needs and wants will be paramount in this new environment.
He continued: “That is not about asset managers being smart or clever, it is about advisers having the right conversation with their clients about what they want, and then the fund manager needs to do what he can to achieve this goal. It is what the adviser wants as well, they just want their client to be happy.”
Mr Aldridge added that there has already been significant growth in this space - in terms of funds and launches, and also in terms of asset gathering – and it can be expected to grow.
He added: “Multi-assets fit very well with the way that advisers are looking to shape their businesses. Also there are a lot of people out there who are focused on capital preservation as much as on growing capital, and these types of products have a strong eye on capital preservation which is important to a lot of investors and their advisers at the moment.”
And it appears that advisers do not think that multi-assets have faired too badly throughout the recession either. In response to the question: how do you feel multi-asset funds have performed during the recession? 11 per cent said ‘well’, 78 per cent said ‘moderately well’, 4 per cent said ‘poorly’ and 4 per cent offered ‘no opinion’ on the subject.
Mr Aldridge was upbeat about the performance of Baring Asset Management throughout the recession.
He said: “We launched our retail fund in 2009, but we were managing our institutional fund prior to that and the performance that we have delivered both in 2008 and 2011 which were clearly very tough years for equity investment and for markets generally, we reserved capital very well for investors.”
The belief - by respondents to the survey - that multi-assets are a useful investment strategy, and there is room for expansion in this area, mixed with the shift in attitude of advisers towards outsourcing, could all combine to result in a prosperous 2013 for multi-assets. But only time will tell if this is the case.
Amy Ellis is senior features writer for Financial Adviser
