The growth of multi-asset (or mixed-asset) investing is a trend that has only increased since the introduction of the pension reforms. But for David Jane, head of multi-asset at Miton, it is something he has been championing for some time.
He explains the emergence of multi-asset in recent years has come from the way the industry has “changed in its nature”. The traditionally separate industries of institutional pension management and the regulated funds business have altered.
“The regulated funds business very much provided the add-on investment vehicle to consumers,” says Mr Jane. He points out the large proportion of consumers’ invested assets were once in life insurance policies and company pensions, but as regulation changed and the industry evolved, “more and more of the investable assets have ended up in collective investment schemes”.
But he notes the problem has been that the collectives industry has tended to focus on input-driven products – funds that invest in areas such as UK or emerging market equities, or emerging market government bonds.
Instead he suggests: “If you’re investing with your core savings what you actually want is output, and there has been very little output-driven products. But as regulation has changed and enabled, it has become possible.”
He adds that the biggest growth in the industry needs to come from products that “focus on delivering a certain output to the consumer, rather than giving them the input and letting them mix the inputs together to create the output. We need to provide ready meals and not ingredients.”
This issue is clearly important to Mr Jane, who left M&G in 2010 to launch his own business, Darwin Investment Managers, with a focus on delivering “outcome-driven strategies”.
“The collective investment scheme industry, historically, has not been very good on focusing on customer needs – it is always focusing on inputs. It is a different way of thinking about the product. We need to focus on what customers need, not what we like to produce,” says Mr Jane.
“That is one of the main reasons I got involved in mixed asset. I think there is a huge opportunity to deliver certain types of risk-reward and focusing on customer needs. Throughout my career I was always global, [and with multi-asset] you have a broad exposure across a huge number of asset classes. What you learn looking across [all] markets is more profound than staring at little tiny markets.”
After three years establishing Darwin and his multi-asset fund, Miton came knocking and asked to buy the business last year. “They offered distribution, brand and bigger capacity, so we basically accelerated the development of the strategies by several years in short order,” he says of his decision to sell.
“I’m a pragmatic individual and I think you have to be. When you make investment decisions you have to be utterly pragmatic and not guided by emotion, and I tend to apply the same [principle] to business decisions.”
As an example he notes in a previous role at Newton: “I closed down a fund I had set up and launched because it was the right commercial decision. When we were at Darwin I was happy to make the decision to sell the business to Miton because it was the right thing to do commercially.”