The trailblazer for this new wave was the Standard Life Investments Global Absolute Return Strategies fund. These funds tend to require deeper resources, such as in-house derivatives expertise, than for a standard multi-asset fund.
For multi-asset funds, the decision is different to picking, say, a standard equity fund.
The aim is not necessarily to find the fund that is going to be the best performer, but the fund that is most appropriate for a client’s needs.
Cherry Reynard is a freelance journalist
Multi-asset in numbers
143: Number of funds listed in the IMA Mixed Investment 20-60% Shares sector
36.46%: Five-year average return from the IMA Mixed Investment 40-85% Shares sector to October 24
46: Number of funds listed in the IMA Mixed Investment 0-35% Shares sector
Expert view
Richard Romer-Lee, managing director, Square Mile Investment Consulting & Research, believes the Investment Management Association (IMA) sectors themselves are not a great starting point for selecting a multi-asset fund.
He explains: “We think the IMA sectors are too broadly drawn, as most of them are based on asset allocation rather than objective or outcome. We don’t think it is appropriate to select a fund on its performance relative to its peer group. It should be assessed relative to its objective. This is particularly relevant when it comes to selecting from the raft of risk-targeted funds now available.”
Choosing a multi-asset fund: what to look for
• Whether the fund has hit its objectives is more important than past performance.
• Sector performance is generally a poor guide to the top-performing funds.
• Where funds use more esoteric asset classes, they need greater resources to analyse them.
• Alignment of interests between the fund manager and investors is important.
• Consider the environment in which a fund manager works and whether they have sufficient support.
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