Most advisers think using multi-asset funds is useful for creating diversified portfolios for novice investors, according to the latest FTAdviser Talking Point Poll.
The poll asked advisers the following question: “How useful are multi-asset funds in building a diversified portfolio for novice investor?”
Almost three in four (72 per cent) answered very useful, while 17 per cent said multi-asset funds are reasonably useful.
Only 11 per cent found them not at all useful to novice investors seeking to diversify returns.
Matthew Riley, head of research in the portfolio research and consulting group at Natixis Investment Managers, said: “Multi-asset funds provide a cost-effective and efficient way of achieving a diversified portfolio."
He added: “Cost-effective in the sense that an investor only has to buy one fund to achieve the desired result instead of a selection of funds, whose suitability in turn would need to be assessed individually.”
While some in the industry stressed the benefits of using multi-asset funds, others warned about the risks of a mismatch in investment goals and fund objectives.
Ricky Chan, director and chartered financial planner at IFS Wealth and Pensions, said as the underlying asset allocation varies widely between multi-asset funds, investors need to understand the fund’s objective, investment remit and underlying investment holdings to “ascertain whether or not a multi-asset fund is suitable”.
Mr Chan added: “Typically multi-asset funds rely on one fund house’s investment process, style and expertise, while multi-manager multi-asset funds allow investors to tap into other active manager’s expertise for additional costs.”
Jason Hollands, managing director at Tilney Investment Management, echoed this view.
“There are many different products lumped under [multi-asset funds] from funds of funds that are fettered to a single group’s product range, products that solely invest via passive instruments, those that will stick within fairly tight asset allocation.”
He added: “It is therefore important to clearly understand the mandate and approach on each fund and be comfortable that it suits the investor’s goals and risk appetite.”