Wellness gurus may tell you that you do not have to prove yourself to anyone, but sadly this is not the case for multi-asset investing.
Andy Miller, lead investment director at Quilter, says the rise of technology along with the move towards passive investing means that multi-asset portfolios will face an increasing requirement to demonstrate their value.
This includes providing portfolios for those investors who have specific requirements, such as sustainable investments, and managing these portfolios in line with investor risk requirements, such as risk targeting.
He adds: “We are also seeing a drive towards different and varied asset classes, such as private markets, and as such advisers and clients will expect multi-asset funds to go beyond the traditional equities and bonds mix. We are also in a very uncertain world where there is scope for a lot of market volatility.
"Multi-asset portfolios will need to provide downside defence during periods of market turbulence, and be prepared for volatility to present itself very quickly.
“We are seeing investors want increasing personalisation, and less desire for off-the-shelf, generic solutions. As a result, multi-asset providers need to have choice and ranges of different funds catering to different goals, needs and preferences of specific investors.
"There is the potential for real innovation in this regard, and the future is exciting for the multi-asset space.”
As the investment world evolves, there are many factors that will impact the industry in the future.
Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors, says two areas that may be set to have large influences on multi-asset investing over the next few years are customisation and private assets.
He adds: “These have historically been the preserve of institutional clients, but technology is opening these up to smaller accounts. More efficient tools and levels of automation allow for better incorporation of client preferences into portfolios. This is increasingly being seen in the wide range of environmental and social objectives that clients wish to include in the way their money is invested.
"Private assets will always have hurdles for many investors given the regulatory focus on liquidity. However, finance is a very inventive industry and the interest in private assets has a lot of momentum behind it. These can offer higher returns than public markets in many asset classes and theoretical diversification.”
As technological developments spread throughout the investment industry, some experts believe it will also impact portfolio allocation.
Interestingly, James Dalby, investment services lead at Aviva, says the vast range of investment tools that are now available to advisers means it is possible for them to produce their own asset allocations and then go on to populate them with funds.
