The growth in popularity of multi asset portfolios in single fund wrappers across the gamut of investor types is an indication of the extent to which fund managers have encroached on the territory of wealth managers and investment consultants.
Several funds worth of diversified assets in one portfolio means fewer funds and managers to spend time evaluating and regularly reassessing, and the inflows to a number of well-known DGFs, most notably Standard Life Investments’ Global Absolute Return Strategy, testify to how appealing this convenience can be.
In the UK DGFs have been an increasingly important component of the growth portfolios of defined contribution pension scheme default funds, which have grown in assets and come under increased scrutiny since the introduction of automatic enrolment in 2012. And since the liberalisation of the tax laws governing investment of funds post retirement, products offering growth with efforts to protect against volatility are of interest to providers seeking to offer default funds to schemes seeking to keep members beyond the age of 55, as well as 55-year-olds leaving corporate DC schemes for retail pension platforms.
However, investors and their advisers have begun to question the risks of a whole portfolio provided by a single manager, and whether multi fund solutions offer an extra degree of diversification. Similarly long term savers, both retail and in institutional vehicles, looking to draw-down their invested assets can benefit from the ability to choose which asset classes to sell off at different time, depending on market circumstances or desire to keep different types of asset for over shorter or longer time periods. This has ignited debate over the merits of multi-fund portfolios over DGFs.
Based on input from a wide range of relevant industry participants, involved in the purchase and manufacture of DGFs, the 8th annual Diversified Growth & Multi-Asset Funds 2017 report will assess the ongoing prospects for the funds, analysing the investor types likely to offer the bulk of inflow growth, and what these investors will be looking for from their investments, in terms of growth versus defensive allocation.
Post by James Redgrave, Consulting Publisher, Clear Path Analysis