Multi-asset funds

02/10/2020

The Basics

What is a multi-asset fund?

Let’s break it down. First off, a ‘fund’ can be thought of as a ready-made basket of investments, managed for you by an expert. Funds often come in themes, like collections of shares in sustainable companies, properties in America, or bonds from European governments. Some investors pick and mix about 8–20 funds and make a portfolio.

Not everyone is confident blending this mix of funds. If that's you, you could consider a multi-asset fund. Imagine a set of Russian dolls – a multi-asset fund is the 'next doll up', aggregating a collection of different funds into one.

These funds typically offer you a wide range of shares, bonds, property and other types of investment – usually from all over the world – in one simple package. The idea is to make your investment portfolio as diverse as possible, which helps to spread your bets around. That way, if one of your investments falls flat, only a small portion of your money is affected. It’s less risky, requires zero investing knowledge, and takes very little effort as an expert runs it for you. Who said investing had to be difficult?

In a nutshell

• Mixes shares, property, bonds and more
• Invest in markets all around the globe
• Less risky than buying individual shares
• Can be kept in an ISA so you don’t pay tax
• An expert does the blending for you

Is It Right For Me?

Good if you ...

  • Want a balanced investment ready-meal
  • Want to invest around the world
  • Want a hands-off approach

Not Good if you ...

  • Prefer to choose your own shares
  • Like to make regular trades
  • Don't want to pay a fund manager fee

People like you ...

Among fund investors

33%

invest in multi-asset funds

The Numbers

The Benefits

• Access to a wide range of investments in one simple package
• Spread your money around multiple countries and markets
• Beginner-friendly – simply set your risk preference
• Leave it to experts to tweak and update over time

The Detail


Visual learner? Try these...


Written and produced by Boring Money; sponsored by Architas


Choosing your multi-asset fund

Risk level

There are different types of multi-asset fund, but many will come with a handy indication of the type of investors that should consider them. For example, they might be a ‘cautious’ investor. This would only have a small amount in the stock market, with the remainder in less volatile investments such as government bonds. More ‘adventurous’ or ‘aggressive’ options may have a higher weighting in the stock market. You can also get options that pay an income. Once you are up and running with a multi-asset fund, you don’t need to do very much. You can just keep topping up and ignore it.

 

Active or passive

Most funds in the market are what we call ‘active’. An active fund manager by definition thinks he or she is smarter than the average investor. They think they can spot a bargain. Identify the region that is about to go belly-up. So they pick and choose. If you buy an active fund which invests in shares, you will usually pay a fee to the fund manager of about 75p-95p for every £100 you entrust to them.

Passive funds are devoid of ego and opinion. They are the well-behaved end of the fund market. Noone makes a call on whether Share A is better than Share B. They simply follow what we call an index, or a list of shares or bonds in any given market. They buy them in proportion to their size and no judgement calls are made. If you buy a passive fund which invests in shares, you will usually pay a fee to the fund manager of about 8-12p for every £100 you entrust to them. It’s a lot cheaper because it’s run by a computer, not an expensive human. The jury is out on which is best. But by definition passive funds will return the average of any market. Some active funds will smash it – others will underperform and charge you for the privilege.


The multi-asset challenge!

Right then – you must be a multi-asset expert by now. No? You’d be surprised how much you retain.

Check out the following video, in which investors explain what it means to save into a multi-asset fund. Then have a go yourself: explain a multi-asset fund to one of your nearest and dearest. Teaching others is a great way to retain information.

 


Written and produced by Boring Money; sponsored by Architas


Choosing a fund

Some of the biggest global names to offer these include BlackRock and Vanguard. Also very popular in the UK are Fidelity, Jupiter and Standard Life.

Architas has a range of active and passive multi-asset funds and sponsored our video content on these pages.

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