Investors on do-it-yourself platforms have been increasingly purchasing multi-asset funds to get diversification, data from Interactive Investor has revealed.
Over the past three years, ii has seen a massive rise in the number of investors purchasing ready-made diversified multi-asset funds.
According to the data, sourced for FTAdviser, the number of purchases in funds in the Investment Association’s multi-asset universes made using ii's regularly investing service has increased by 122 per cent since 2020 to the end of 2022.
The figure for H1 2023 alone is 18 per cent more than the figure for the entirety of 2020, according to ii.
The universes in question are the IA Mixed Investment 0-35% Shares, Mixed Investment 20-60% Shares, Mixed Investment 40-85% Shares, Targeted Absolute Return and Flexible Investment sectors.
One of the most popular multi-asset fund providers is Vanguard, whose LifeStrategy range has been appearing frequently on the platform's monthly list of top 10 most bought funds.
Vanguard's 20%, 60% and 80% LifeStrategy variants are often among interactive investor’s Quick Start Funds for beginner investors, with what ii called a "clear and defined strategy, low cost, and strong long-term track record of outperformance since inception in 2011".
Last year, as reported by FTAdviser, Vanguard launched two more products to the range: Lifestrategy MPS Classic and Vanguard Lifestrategy MPS Global. These were designed to provide access to Lifestrategy for advisers who prefer model portfolios.
Myron Jobson, senior personal finance analyst for interactive investor, said: “Multi-asset funds have grown in popularity among our customers in recent years, which have seen seismic shifts in the investment landscape.
"Investors have increasingly put their trust in them to ride out significant fluctuations in global markets."
As inflation continues to bite, with higher interest rates putting more pressure on consumers, the ability to save into just one fund, reducing trading costs, is attractive, Jobson indicated.
He added that another element was the simplicity of buying one diversified product, showing investors understand the value of multi-asset funds.
Jobson explained: “Investors can be overwhelmed with the huge amount of choice of investment products, but a multi-asset fund offers a very simple way for less confident investors to invest – something that is not to be sniffed at amid the current volatility in markets.
"They split your money across a mix of different assets, but mainly invest in shares and bonds. Different types of investments are unlikely to all outperform or underperform at the same time, which over the long term typically gives investors a smoother ride.
“These funds are managed by professionals who have expertise in asset allocation, making it easier for investors to access a well-balanced portfolio without needing to actively manage it themselves."
