Multi-asset Investing: Many clients ask these 5 questions
We’re seeing strong growth in multi-asset strategies. And we’re not alone. As Casey-Quirk notes in their November 2015 report, the industry is expecting to see more than $3 trillion of demand for multi-asset strategies worldwide between now and 2020.
So it’s no surprise that we’re seeing clients driven by a desire to understand multi-asset strategies. Of course, we always tell clients that we believe multi-asset solutions may help them achieve their desired outcomes, whether the goal is income, growth or capital preservation. That is why our firm is purpose-built to help deliver such solutions.
In our experience, we’ve found that our best conversations occur when clients ask us these five questions:
1. Do you understand my desired outcomes?
Good asset managers know how to design, construct and manage portfolios to help achieve investors’ specific outcomes. A common example is whether a client has saved enough to ensure they don’t run out of money in retirement.
Or take a non-profit organization – they might want to ensure they can spend 5% each year while keeping principal intact on an inflation-adjusted basis. Either way, we have tools that let us accurately design a portfolio to help investors move towards their investing goals.
2. How robust is your investment process and risk management?
We believe that the best asset managers use a range of strategies to integrate investment insights. During 2015, for instance, our strategists believed in the principle of “buying the dips.” That approach allowed them to buy into several mini-crashes.
For 2016, our strategists are advising to “sell in the rallies,” as noted in our latest Global Market Outlook.
3. Do you have a skilled investment team?
As in most industries, experience, skills and a diversity of viewpoints can help to achieve success.
At Russell Investments, we’ve built a team of strategists, analysts and portfolio managers with decades of experience. They work within an organization purpose-built to help clients achieve their desired outcomes.
4. Do you really do everything well yourselves?
Many times investment firms, while appearing to offer a broad menu of skills and services, are actually third-party middlemen serving up licensed products. However, this can often lead to a disconnect between a client’s desired outcome and actual investment execution.
It’s important to understand how a firm identifies opportunities and whether they really have deep expertise in those opportunities and understand how to connect them directly to client objectives, without third-parties getting in the way.
For instance, it’s been obvious this year that several key European banks are having difficulty. So we’ve hired a dedicated third-party money manager with deep knowledge about that sector to not only hunt for the right European bank stocks, but to also choose between different bank bond classes.
That’s something only a specialist can do well. And only when you’re free to find just the specialist you need, rather than re-sell a committed, limited set of products, do you have that freedom to help a client towards their best path.
5. Theory and practice are different things, how do I know you can do both?
A top-tier provider does more than offer the best tools for trading execution. Skilled implementation identifies the most appropriate and effective ways to turn an investment idea into reality.
That means identifying the investor’s objectives and constraints, and then selecting the most appropriate instruments and strategies to help achieve those objectives within the required parameters.
Investing isn’t easy in today’s economic climate. As a leader in multi-asset investing, we’re always glad to talk with institutional clients who are carefully evaluating their prospective asset managers – and who are asking challenging questions.