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Why Are IFAs RecommendingMulti-Asset Funds?
Martin Bamford CFP FPFSChartered Financial Planner
Introduction
Research Baring Asset Management Investment
Barometer
47% of intermediaries encouraging clients to invest in multi-asset products
Up from 36% last time they asked
Highest since question first asked in Q2 2011
Definition Combination of asset classes in one fund
Manager responsible for asset allocation & stock selection
IMA Mixed Investment sectors
The Bad Old Days Cautious, Balanced, Active Managed
Half of cautious managed funds invested in alternative investment strategies
“Barclays fined £7.7m for Aviva fund sales failings”
Mixed Investment
“provide greater clarity to consumers”
Weak reasons HSBC – interview of 200 intermediaries
Most important factors:
Client knowledge of the provider
Existing relationship with provider
Least important factor:
Skill & expertise of fund manager
Better reasons Consistency of performance
Risk-adjusted returns
Cost
Skill & expertise of fund manager
Sector performance Mixed Investment 40-85% Shares cumulative
performance:
0.69% 1 year 20.89% 3 years 31.74% 5 years
UK All Companies cumulative performance:
1.55% 1 year 31.35% 3 years 50.04% 5 yearsSource: FE 15th September 2015
Mixed Investment 20-60% Shares
139 funds in this sector
Ongoing Charges range from 0.24% to 3.8%
One year performance range from -7.75% to 7.19%
Volatility ranges from 0.63 to 2.65
Why? Fire & forget solution
Abdicates responsibility
Lack of in-house resources
Focus on Financial Planning
Getting better Risk target managed funds
Run to stay within risk profile boundaries
Offers suitably diversified exposure
Even better Determine strategic asset allocation
Make tactical adjustments
Populate with single asset class funds
