However, these banks are allowed to sell multi-asset funds with a limited allocation to equities. “And these days, bond investments are not very attractive anymore, so retail investors should buy defensive balanced funds to invest properly,” adds Marcus Stahlhacke, head of retail multi-asset strategies for Allianz Global Investors. And that’s what his clients are doing: since 2005, assets under management in Allianz GI’s multi-asset offering have been growing from €18bn to more than €120bn.
“Especially exposure to alternative funds is very important nowadays because it gives you access to additional alpha sources,” says Stahlhacke. The audience, comprised of German fund selectors, seems to agree. Half of them intend to increase their allocation to multi-strategy funds in the next 12 months, while only one in five intend to do so for absolute return funds in general.
The opacity of funds
The stars might be well-aligned for multi-asset funds, investors in the space are coping with a massive problem. It’s difficult to select the right products because there are so many performance and risk sources in multi-asset funds. “In the end, it’s about trimming down the risk factors which drive the performance of a fund,” says Claudia Roering of Lupus Asset Management (pictured right). “Some 60% of long-only multi-asset funds are highly correlated to equity markets, so that gives you an indication where bulk of their risk is invested in.”
That said, the job for a fund selector remains more cumbersome than for most other asset classes. For example, there are no reliable peer groups are benchmark to compare a fund with. And there are very few multi-asset funds which have actually experienced a sustained period of falling prices. “We need more volatility in the markets to see which strategies are successful,” admits Romig.
“And most funds in this space have a track record of only one to three years,” adds Jens Kummer, managing partner of MARS Asset Management in Frankfurt.
Tribute to the professional
Keeping that in mind, and to end the discussion on a positive note, Kummer contended that multi-asset funds are actually a blessing for the stability of financial markets. “I feel more comfortable in seeing how professional investors allocate money than in watching alpha mistakes being made by private investors who mainly invest in the best asset classes of the past 12 months.
Click here to see a full breakdown of the delegate voting results from Expert Investor Deutschland.
And click here to see a slideshow of photos taken during the event.
