Beyond Labels: Navigating the Multi Asset Universe

IN THIS PAPER

‘Outcome-oriented’ focus. Asset owners are increasingly seeking to invest in a strategy-agnostic manner, focusing on risk and return profiles rather than labels. As a result, it is important to be able to consider a diverse group of multi-asset strategies side by side in outcome-oriented manager searches.

A new taxonomy. Investors can conceptualise the liquid multi-asset universe using a new schematic which features eight distinct categories – not including ‘outsourced CIO’ models – and nineteen sub-categories. This spectrum can be divided, crudely, into long-only (or long-biased) and absolute return approaches.

Vital statistics. 'Key facts’ sections showcase returns, volatility, Sharpe Ratios, numbers of institutional-quality managers available to investors and more.

WHY DOWNLOAD?

This brief report seeks to provide a helpful, practical guide to investors that seek to navigate the multi-asset sphere. In Seven Shades of Multi Asset (bfinance, 2018) we introduced a framework for understanding the landscape of multi-asset strategies. This new article extends the framework to provide more granular classification and further detail across all categories.

Yet why should investors seek to understand the multi-asset universe – not just the strategies that bear a ‘Multi Asset’ product label or one of the associated sub-labels (such as ‘Diversified Growth’ or ‘Risk Parity’) – in its entirety? Firstly, it is helpful to approach multi-asset investing in a ‘strategy-agnostic’ manner. Secondly, sophisticated investors may not have a specific allocation target for multi-asset strategies and may use them for different reasons. Thirdly, examination of the full spectrum helps to unpick some common misconceptions.