Multi Asset Investment
The so-called “new” concept of Multi Asset Investment has been somewhat of a buzz phrase around the investment community in recent times. But is it really new, and what indeed does this offer the investor?
The definition that describes a Multi Asset fund will vary, but Ashburton’ s view is that a true Multi Asset fund will offer a high level of diversification between different asset classes and across different geographical regions. In essence, the Ashburton approach would see an investor’s money being spread between assets such as equities; government bonds, corporate bonds, foreign exchange, commodities, Hedge Funds, property, and cash, to mitigate risk. Ashburton is one of the few investment managers who utilise cash as an investment asset in its own right, and many investors are comforted to see that we are not afraid to increase cash levels in our Funds during times of market stress. This overall strategy results in the portfolio having an inbuilt natural hedge against a potential downturn in one particular asset class.
Ashburton clients have had the benefit of this holistic style of investment management for over 30 years; and our first unitised Multi Asset Fund, the Ashburton Replica Asset Management Fund, was launched in 1992. Since then, the Fund has delivered an impressive 6.24% annual compound to investors, over a period which has witnessed both highs and lows for investment markets. The Asset Management Funds have the simple but highly effective ethos of actively allocating between four main asset classes: equities, bonds, cash and foreign currency. The Funds are able to rebalance between these core assets in ways that many managed funds cannot; to take advantage of the upside and preserve against the downside. More recently, we have enhanced the range of funds available under the Multi Asset banner by adding three Multi Asset Funds which are structured on a sliding scale of risk - cautious, balanced and aggressive. This allows investors to choose a fund suited to their investment objective and tolerance to risk, plus it offers the flexibility of switching up or down this scale if these change. As well as utilising the traditional asset classes used in the Asset Management Funds, these new Multi Asset Funds can use commodities, hedge funds and alternative assets such as property to add diversity to portfolios.
So what does this mean for investors, and why should they be considering a Multi Asset approach? The answer could lie in the view that the diversification offered by a true multi asset fund may offer the investor a better chance of a consistent return without as much of the worrying volatility usually associated with investing into ‘risk assets.’ This view is highlighted by the profound changes we have seen in the world’s economy. Some believe that the investment world may never be quite the same again following the events we have all witnessed over the last five years or so. Investors who have traditionally taken directional bets on single assets such as equities may now look on with incredulity as the financial world lurches between crisis and meltdown.
As a result, the word ‘volatility’ has now become part of everyday language for investors and it may remain that way for some time to come. The Ashburton investment process embedded within the Multi Asset Funds is aimed a delivering long-term growth with reduced volatility. All of the funds take a global view; whereby the investment manager can seek out opportunities worldwide rather than concentrating risk within one geographical region. Each of the Funds also has clearly defined parameters when it comes to risk taking. For instance, the Cautious Fund can never hold more than a 30% exposure to equities, whereas the Balanced Fund may increase this exposure up to 60%. We can also make use of efficient portfolio methods such as using derivatives to quickly and inexpensively reduce or increase exposure to risk assets when we see opportunities arise. The efficiency with which the funds can allocate between different asset classes, particularly in such volatile times as we have witnessed, is vital to the long-term success of the Funds. It is usual too for all of our Multi Asset Funds to put a currency overlay strategy in place so that the investor’s underlying currency is used to its best effect. Without this it is quite possible that an investor’s gains in one overseas asset could be lost if currency movements go against the main currency of the Fund. Our view is that a globally focused portfolio of investments, a flexible approach and active management within a strict investment methodology is the recipe for delivering on the investor’s long term goals, whatever their appetite for risk. As well as the Asset Management Funds’ near 30 year history, the more recently launched Multi Asset funds already have a healthy 5 year track record of positive growth.
The world may think that multi asset Funds are a new phenomenon, but we at Ashburton have successfully pioneered the approach for three decades.
