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Why Multi-Asset?


Why the rules are less clearly defined for multi-asset funds today

Multi-asset is evolving from straight forward cautious and balanced outlooks to outcome-orientated and targeted-return strategies. But as investors enter a new era of quantitative tightening, a focus on traditional, long-term metrics will be key to achieving success according to T&IO.

The investment industry has been on a steep learning curve over the past decade, with regulatory change, political revolutions and monetary policy upheaval leading to unprecedented market economics.

It has changed multi-asset investing in particular – not always for the better.

Capital markets research and modelling: The engine of a multi-asset portfolio

As the universe of multi-asset solutions continues to grow, the key to delivering long-term, stable returns often relies on how well the underlying drivers of risk and return are understood and managed in a portfolio. But how easy is it to model the possibilities?

The onset of the global financial crisis a decade ago instigated a new era for fund managers when it came to analysing risk and returns.

The rise of the new alternatives

As yields have compressed and forward-looking return expectations fall, multi-asset managers have sought alternatives to traditional asset classes to find new sources of income and boost returns.

Driven by the search for income in a prolonged low return environment, the growth of alternatives has continued at a faster pace over the past two decades.

Demand for these assets is expected to rise as investors hunt for uncorrelated sources of return outside of equity and bond sectors. Michael Howard, Head of Alternative Investments at T&IO explores.

Multi-asset allocation amid ‘shifting’ economic centres of gravities

Changing demographics, globalisation and technology are just some of the factors pushing capital from Western economies to Eastern economies over the past thirty years. Are multi-asset portfolios at risk of being left behind amid such historic regime shifts?

There are a range of fundamental characteristics of markets and economies that help drive multi-asset portfolio allocation decisions. Yet few long-term assumptions are cast in stone, and given the current confusing investment outlook, the need to step back from market noise and take note of the wider and more impactful economic ‘shifts’ happening around us has never been more important.

Asset allocation: Why the strategic versus tactical debate matters

Seen as the building blocks of a portfolio, strategic and tactical asset allocation processes should work in tandem to deliver on-target and risk-adjusted returns. Here, the two processes are analysed to see how they complement each other to deliver long-term results.

Investment returns from even the most well-diversified multi-asset portfolios are likely to be subdued for the foreseeable future as an environment of super-normal monetary policy and low yields continues.

Alongside stretched valuations in a number of asset classes, the need for proper asset allocation to generate sustainable alpha has never been greater. Barry Widdows, Head of Multi-Asset at T&IO explains 

Glossary of multi-asset Investing

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"Prudential" is a trading name of Prudential Distribution Limited. Prudential Distribution Limited is registered in Scotland. Registered Office at Craigforth, Stirling FK9 4UE. Registered number SC212640. Authorised and regulated by the Financial Conduct Authority. Prudential Distribution Limited is part of the same corporate group as the Prudential Assurance Company. The Prudential Assurance Company and Prudential Distribution Limited are direct/indirect subsidiaries of M&G plc, a company incorporated in the United Kingdom. These companies are not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.