Are multi-asset strategies the new fund of funds?

May 22, 2013  

Asset managers respond to economic changes

Comment by Joy Dunbar

When I first started writing about investments in 2007 I was put in charge of writing about multi-manager funds.

The aim of these funds was to pool the best funds that the market had to offer and the fund selector would be able to assess the geographical, investment and strategic risk, with the objective of achieving better returns while – in the process – adding another layer of charges.

So the investment story went. But pure multi-manager funds have lost some of their appeal in the aftermath of the financial crash, while multi-asset strategies have been attracting assets.

The past few years have seen an extraordinary period in the financial and investment world – with markets diving, with the credit crunch halting investor confidence, with emergency taxpayer-funded bailouts of banks, with record-low interest rates and with massive programmes of monetary and economic stimulus measures from governments in the developed world.

Although Armageddon appears to have been staved off, nervous investors continue to face a difficult and uncertain world – where returns are lacklustre, where yields remain at very low levels and where there are growing fears of a bond market bubble.

As a result the asset management industry has had to respond to this new environment by changing tack in the hunt for yield.

This is best highlighted by the success since its creation in 2008 of Standard Life Investment’s huge Global Absolute Return Strategies Fund – which has become the most popular multi-asset fund because of its European-wide distribution, via the UCITS framework, and which has also captured the imagination of US market too.

Others seeing the success of that fund and other multi-asset funds have launched their own 'me too’ portfolios as investor appetite has been whetted.

Italian fund of funds specialist Kairos Partners has launched its own multi-asset fund and is also targeting additional investment areas including commodities and property. And other multi-managers have adapted their investment style solely away from funds of funds to include yield-returning assets like property or macro strategies.

Going forward, true diversity will be the key to capturing alpha and it looks increasingly clear that multi-asset funds have re-ignited the imagination of investors.

  For a free trial of Absolute UCITS please click here. 


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