Multi-Asset Investing Explained
Multi-asset investing is quite rightly a balancing way of spreading investments across asset classes and it aims to generate sustained returns over the long term. Multi-asset really comes down to approaches that are not benchmark plus. When you're building a multi-asset strategy, investors are not only focusing on the return outcome but also the volatility of the strategy. Multi-asset funds can offer investors exposure to a broader range of assets, sectors, strategies, and direct investment exposures (e.g. individual securities, bonds) with greater flexibility. They are diversified across both traditional and non-traditional asset classes, such as real estate and infrastructure. The goal is to provide the opportunity for growth while carefully managing risk. By spreading the investments across multiple assets, investors can benefit from gains in all those asset classes without exposing yourself too heavily to the risks associated with those assets. One asset's value can tank, and as long as investments properly diversified, it won't wipe out the entire portfolio. Multi-asset investing provides upside potential through equities and alternatives, plus potential downside protection that a risk-managed portfolio can help to deliver.
A multi-asset portfolio is designed to navigate potential market shifts through tactical trades, tilts, and factor exposures. It has the flexibility to respond to changing market conditions, seeking out areas of greater potential return while attempting to avoid sectors that could add unnecessary risk to a portfolio. Multi-asset solutions rely on dynamically allocating portfolios based on strategy views and outlooks. Therefore there is the risk the perspectives may not be realized. Multi-asset portfolios provide actively managed exposure to various sectors, asset classes, geographies, and market capitalizations, giving you access to a broad investment universe. Multiasset portfolios can also use derivatives - such as options, futures, and currency hedging – which allow the portfolio manager to steer the funds in pursuit of the desired investment outcome through risk management and return-seeking positions. Of course, diversification and multi-asset investing do not assure a profit or protect against loss.