Multi-asset funds have become crucial for advisers and their clients – and why wouldn’t they: dynamically managed, broadly diversified and relatively risk-averse, mixed-asset strategies aim to provide steady returns in all market conditions while also giving investors access to a product that can react flexibly to the current market environment. In association with PIMCO, we set out to delve into the joys and challenges of multi-asset investing. • How have multi-asset funds fared in different market environments? • What do advisers need to be mindful of these days? • And what actually makes a good multi-asset manager? Learn about the ins and outs of navigating the multi-asset universe and find out what it takes to successfully run a multi-asset portfolio.
How can multi-asset investors make the most of the current environment and weather market jitters, inflation woes and political tensions?
Asking the big questions
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In times of economic distress and mounting volatility, the ability to react swiftly to rapidly changing circumstances is becoming even more important. Enter multi-asset funds
The perfect stabiliser
Geraldine Sundstrom, managing director and portfolio manager at PIMCO, explains why multi-asset funds are thriving in the current environment
The great transformation
Citywire’s Ian Horne gives an overview of the status quo in multi-asset investing
Quest for diversification
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WEBINAR - 14 June 2022, 10am BST
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Now more than ever The case for multi-asset investing
A closer look at an investment approach that has never been more relevant than today
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2 Educational Modules: 1. Multi Asset (May/June) 2. ESG (Oct/Nov) Each module splits into: x3 bitesize elements designed to educate + promote webinar sign up - Animated video studio recording (Similar to Hermes) - Podcast with PIMCO + 1 income investor - Longform article with audiobook version OR Mini documentary on opportunities from interest rates rise x1 webinar hosted live and distributed through catch up after
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Multi-asset funds provide a level of flexibility single-asset investors can only dream of. But it’s not just their ability to move swiftly in and out of asset classes at the most opportune time that can make the lives of advisers a lot easier. By providing exposure to a variety of areas and sectors, multi-asset funds are also able to make the most of the possibilities at hand. Ian Horne, head of UK audience development at Citywire, shines a light on the intricacies of multi-asset investing, explains what to look for in a good multi-asset manager and reveals why multi-asset funds are now more relevant than ever.
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Explore the many faces of multi-asset investing here
In this podcast we discuss: • Fundamental shifts reshaping the economy and their impact on multi-asset investing • Implications for top-line growth and inflation • How investors can account for the dynamic nature of cross-asset correlations • Where investors can find compelling opportunities in this environment
Geraldine Sundstrom Managing Director and Portfolio Manager, PIMCO
What do the current transformational trends mean for multi-asset investors?
Guy Foster Chief Strategist, Brewin Dolphin
Ian Horne Head of Audience Development, UK
Multi-asset funds have outperformed the market in recent drawdowns. In a time of economic distress and volatility multi-asset funds offer diversification and flexibility to adjust portfolio positionings in changing environments. With a potential risk of recession looming on the horizon, the ability to react swiftly to changing circumstances is becoming more and more important. We asked the audience of New Model Adviser for their take on the current multi-asset landscape. The answers we received paint a detailed – and in parts surprising – picture of an investment approach that is playing an increasingly important role these days. This piece is worth an indicative 30 minutes of CPD.
The case for multi-asset funds
A poll among NMA readers shines a light on the joys and woes of multi-asset funds, transformational shifts, and current opportunity sets
We spoke to Joseph McCurdy, account manager at PIMCO ‘Multi-asset products do something many individual fund pickers may struggle to do themselves,’ he says. ‘They act as great diversifiers, not least due to their flexibility and the broad range of asset classes they cover.’ This heterogeneity spells opportunity, especially in times of crisis. 37% of poll participants use multi-asset products as diversifiers while an equal percentage of respondents employ them as a holistic solution. Multi-asset funds, McCurdy says, provide a level of adaptability ‘you may not get if you just buy equities in a single-asset fund’. The ability to move in and out of asset classes at the most opportune time can make the lives of advisers a lot easier, he adds. ‘If something happens in the markets, there can be less worry about things like rebalancing their portfolios and adapting them to a new reality. Multi-asset funds can serve as a safety blanket, which comes in handy in times of distress.’
PQ: What are you using multi-asset products for?
37% As a diversifier 37% As a complete solution 21% Other 5% As an outsourced option
But despite their draw, multi-asset funds are by no means immune to external shocks. According to more than half of poll participants, inflation is the biggest factor in determining their decision to invest in multi-asset funds. By comparison, less than a third believe that the war in Ukraine will be the defining theme for multi-asset investors in the months to come. It’s key to remember that there are both holistic multi-asset portfolios, which are more of a one-stop shop for asset allocation, as well as more specialised solutions like inflation-fighting multi-asset portfolios. ‘Multi-asset funds can pick and choose where they get their exposure from. That’s why something like Russia’s invasion of Ukraine or Covid-induced supply chain issues, which can be managed through asset allocation shifts and thematic allocations, are generally seen as having a much smaller effect on them than on single-asset portfolios,’ McCurdy points out. As for inflation upticks, long-term experience is crucial. Investment managers haven’t had to grapple with inflationary periods in developed countries since the 1990s, so the number of fund managers who have had any first-hand experience in dealing with rapidly increasing prices constitutes a small strata. Times like these, he adds, require level-headedness and prudence.
PQ: Which theme will have the biggest impact on multi-asset investing in the months to come?
52% Inflation 29% Russia/Ukraine conflict 16% Supply chain issues 3% Reopening boom in major developed economies
Challenges
However, remaining calm is easier said than done when equity markets have been on a rollercoaster ride for the past few months, and fixed income is facing a challenging course. In PIMCO’s latest Cyclical Outlook, global economic adviser Joachim Fels and CIO of global fixed income Andrew Balls make no bones about the current environment but do see opportunities ahead. ‘Significant uncertainty clouds the outlook as the global economy confronts a shock that is negative for growth and will likely spur further inflation,’ they say. ‘In our base case, growth remains supported by the post-pandemic economic reopening and pent-up savings bolstering demand. Inflation may peak in the next few months and then moderate gradually.’ But Fels and Balls point out that there are risks to this scenario. Should the war in Ukraine escalate further, the possibility of a recession in Europe is not out of the question. To find opportunities in such a highly-charged environment, people are turning their eyes towards emerging market equities, as indicated by half of poll participants. Meanwhile, only 30% of respondents find developed market equities the most compelling asset class. Listed alternatives and government bonds bring up the rear, with a combined 20% of votes. Multi-asset funds, with their relative ease of exposure to a variety of areas and sectors, are able to make the most of the possibilities at hand. Their beauty, McCurdy says, lies in their universality. ‘For all intents and purposes, a multi-asset fund is there to deliver something different.’ After all, the ultimate goal is to diversify risks away from one single asset class. ‘That’s why people buy them as a one-stop shop solution or as a diversifier, not as a direct exposure to a specific asset class or market environment.’
PQ: Where do you find the most compelling opportunities?
50% Emerging market equities 30% Developed market equities 15% Listed alternatives 5% Government bonds and equities
Opportunities
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The many faces of multi-asset investing
Daniel Joseph McCurdy Vice President Account Manager, PIMCO
In light of spiking volatility, surging inflation and the rise of geopolitical conflicts, many investors just want to bury their heads in the sand and call for a timeout. Instead of giving into the gloominess of it all - because, let’s be honest, when has that ever helped - we take a step back and focus on the bigger picture. In this webinar, we explore how multi-asset investors can make the most of the current environment and weather market jitters, inflation woes and political tensions.
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Multi-asset Investing 2.0
