Investing today is about the total portfolio selection, and not a single stock or product pick, the head of Blackrock’s UK client business for retail iShares and wealth has said.
Speaking on this week’s FTAdviser podcast, Nick Hutton said: “It is about portfolios, it is not about products.”
He said modern investing should look at understanding what all the different products in a portfolio achieve together, for instance what is the total currency and sector exposure.
“Portfolio construction technology has increased so [we have] the ability to understand how all of these products interact.”
The combination of this and the development of index funds means there is now a huge amount of product to populate an asset allocation thesis, he said.
“Every single division to invest in a passive instrument or index investment is an active decision,” Hutton added.
Turning to the future of passive investing, Hutton said indexing has a “really core part” to play in the future of portfolios.
“We have just gone through a 10 year bull-market with ultra-low yields, investors are now faced with this new regime of market volatility.
“They have to navigate through today’s macro challenges but also really focus on how they think about strategic and tactical asset allocation.”
sally.hickey@ft.com