What are multi-asset funds?

What is a multi-asset fund of funds?

A fund of funds is a common way of building a multi-asset fund. It brings together several different types of funds into one. They can include funds focusing on company shares, bonds, property and even cash.

Different types of funds perform differently as markets go up or down. So bringing them together can smooth out the overall performance of the multi-asset fund of funds and help balance out any risks and returns. That’s very different from single asset class funds. These include one type of asset class only, so their value can swing more as the market for that particular asset shifts.

Of course, the value of any type of investment fund can go up or down, but multi-asset funds are designed to help manage that kind of shift by diversifying across asset classes.

How our multi-asset investment strategies work

We offer a wide range of multi-asset strategies. Our Asset Allocation team manages them, building robust well-diversified investment portfolios. The types of multi-asset strategy we deliver include our:

• Multi-Index funds, which mostly hold funds that track broad market exposures across major asset classes, so they’re both well diversified and cost effective to run. 
• Mixed Investment funds, which let you choose how much of your money goes into company shares, with the rest going into bonds and other assets. 
• Multi-Manager funds, which offer a range of funds that blend our funds with funds managed by our preferred third-party managers. 
• Model Portfolio Service, which includes off-the-shelf portfolios that financial advisers can use to provide an appropriate mix of funds for their clients. They can also work with us to create bespoke portfolios and strategies for them.
• Multi-Asset Target-Return Fund, which aims to achieve an average annual total return that’s 5% higher than the Bank of England’s current base rate on a 3-year rolling basis.

What can I expect from a multi-asset fund’s performance?

That depends on a number of factors. It’s a bit like asking: “What can I expect from a car’s performance?” As with cars, different types of multi-asset fund can do many different things for you. Whether or not a specific fund is right for you depends on your financial needs and goals.

But broadly speaking, we can say that multi-asset investment funds:

• can help you diversify your investments while also focusing on particular areas or types of investment
• should smooth out market ups and downs and help you achieve specific risk / reward trade-offs
• can let you take advantage of our asset allocation expertise and track various markets in a cost-effective way
• as with all investments, can go down as well as up in value and can’t guarantee any specific rate of return

How to choose the right multi asset strategy for you?

To choose the right multi-asset fund or funds for you, you need to both assess any possible funds and have a clear sense of your own needs.

When you’re evaluating and comparing funds, we’d suggest looking at each one’s:

• Factsheet: What’s it looking to achieve? Is that right for you?
• Risk profile: Is it right for you? Can you select one more aligned to your risk tolerance and capacity while meeting your return expectations?
• Fees: How are any costs and fees worked out, and how much are they?
• Management brand and expertise: What sort of reputation do its managers have?
• Track record: How effectively has it hit its financial targets in the past? Past performance doesn't guarantee future results though.

You should also be clear about your own financial goals and needs. Any multi-asset fund you choose should help you achieve them. But you should keep in mind that you might get back less than you put in.

If you need help either defining them or using them to help choose a fund, we’d recommend a chat with a financial adviser. If you don’t already have one you can find one at Unbiased. We also offer a Savings and Investment Advice service.