The rules to follow in a multi asset strategy


9:30 am

20 June 2019

Diversify investment this is generally a good strategy for riding out any crisis periods. It is no coincidence that one of the consequences of the 2008 crisis was the extraordinary rise in so-called multi asset funds. Before the “Lehman crisis”, most investors used a more conventional approach, investing above all in fixed income and shares. There was also a tendency to neglect considerable risk factors such as duration, currency and liquidity.

As soon as the financial crisis hit markets all around the world, what became obvious right from the outset was the inefficacy of this strategy. Investors also noted how what appeared to be well-diversified portfolios were anything but. In the words of Warren Buffet: “Only when the tide goes out do you discover who has been swimming naked”.

In any case, the crisis was a rude awakening for the investments sector and multi assets funds emerged as a possible solution to the problem. Consequently, demand for these products has soared, as has offer. A multitude of Asset Management Companies now offer multi asset funds, like Tendercapital Alternative VI. (Click on the link for more descriptive and promotion information on Tendercapital Alternative IV.)

How to navigate your way through the sea of competing multi asset funds? By following some specific rules.

A multi asset fund manager needs to be flexible and bold

The strong points of multi asset strategies can be leveraged by the flexibility and boldness of the saver’s resources manager. This combination of characteristics may translate into potential investment success. Sometimes it may be useful to drastically reduce asset allocation in shares, to minimise the bearish risk to investment and maximise potential returns.

A good multi assets investor is dynamic

Financial markets are intrinsically changeable and a well-prepared investor needs to be ready to react. A trustworthy multi assets fund needs to have a long term objective and stick to it, even during periods of reduced fluctuations, and assess the potential impact of destabilising monetary policies or political risks.

Creativity plays a big part in all this

It is no longer enough to simply increase bond allocation to shelter yourself from reductions, today it is important to embrace alternative protection mechanisms. In fact it is important that a multi asset investor minimises bearish periods. What it means to constantly reinvent yourself. Fortunately, having a flexible mandate enable you to implement a series of protective strategies. For example: put options, active currency management and a myriad of cover options.

Remember the golden rule: value is hidden everywhere

In a universe consisting of 23 countries, where all activity classes are closely monitored, there are ample margins for creativity. It is always important to take new opportunities into account, this is why it is important to look beyond the world of traditional mutual funds, and look into alternative funds.

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