Future-proofing your multi-asset portfolio

This article is part of
Guide to managing a multi-asset portfolio in a crisis

Future-proofing your multi-asset portfolio

Investors across all markets face the challenge in the years ahead of aligning their investment portfolio with the new world of rapid technological revolution. 

Those changes were having an impact on the performance of markets prior to the pandemic, but the Covid-19 crisis has arguably sped up that shift. 

Peter Fitzgerald, multi-asset investor at Aviva Investors, says one likely impact of the pandemic will be an increase in spending on renewable and energy efficiency.

By contrast, the “obvious losers” in the coming years will include companies such as airlines, where a cultural shift which extends beyond the fall out from the crisis has taken place. 

He adds that clients should also be wary that a trade conflict between the US and China escalates in the years ahead - something he says would be very negative for traditional technology companies, and for many emerging market assets.

In such a climate, the US dollar and also Japanese assets are likely to perform well, he predicts, as they typically do so in times of market strife.  

Wayne Berry, investment manager at Brewin Dolphin, says he has placed client capital into the Scottish Mortgage investment trust.

He says: “The managers are focused on the very long-term trends out there, and have a very strong track record in performance terms over many years.”

Adapting to rapid change

David Coombs, multi-asset fund manager at Rathbones, says: “Among the clearest impacts of the Covid-19 pandemic is the rate at which structural trends and changes that were already underway, for example the move to online retailing or businesses moving to use cloud services, have accelerated.

"To future proof a multi-asset portfolio we have to be aware of these changes, and we have to question every company we own about how they intend to make sure they are the right side of them.

"These accelerated changes mean that businesses need to be thinking about new distribution channels, maybe direct to consumer rather than third party distributors, or new digital strategies that require the support of consultancy businesses to evolve the way they operate.”

He adds: "We wonder if in a post Covid-19 world, consumers may look to how companies behaved during the pandemic and this may factor into their purchasing decisions.Those who were seen to be treating customers or staff poorly, and there have been many examples of this unfortunately, could easily find that they have turned many consumers off their brand. This is equally forming part of the evaluation we are making about businesses we own.” 

Away from technological considerations, Clark Fenton, portfolio manager at RWC, says one consideration clients should bear in mind for the future is that inflation rises.