PA OPINION: Why investors are running out of new ideas

Added 17th August 2016

Call it symptomatic of the summer lull but, with so much debate centred on cost, genuine product innovation seems to have taken something of a back seat.

PA OPINION: Why investors are running out of new ideas

While September will inevitably herald in a number of new fund launches, it is arguably proving harder than ever to excite the investment community struggling to find justifiable reasons to move assets.

Invest in equities? Where’s the value? Bonds? Where’s the yield? Absolute return? Where’s the performance? Property? Er, perhaps not a great idea right now…

Instead, asset managers are looking to ‘multi-asset’ for new ideas, an increasingly vague term which captures funds in the IA’s Mixed Investment categories as well as within absolute return.

According to Baring Asset Management – which itself has invested heavily in the space – over a quarter of IFAs are encouraging investment in multi-asset funds to combat current market volatility, with a fair portion expecting to increase their exposure to such strategies.

That’s fair analysis, though it perhaps neglects the bulk of the wealth management community whose job it is to make their own asset allocation decisions.

"Invest in equities? Where’s the value? Bonds? Where’s the yield? Absolute return? Where’s the performance?"

The greatest level of innovation in recent years has come in the aforementioned absolute return space though – as the recent poor performance and outflows from Standard Life GARS suggests – the larger, multi-faceted strategies have lost some of their sheen and future success is not guaranteed.

Indeed, with the FCA about to undertake a review of absolute return – and two-thirds of such funds having posted negative returns this year – perhaps there’s innovation in simplification, while also maybe relabelling the sector to remove any promises of ‘absolutes’!

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About Author

Gary Shepherd


Portfolio Adviser

Gary joined Last Word Media in 2009, becoming editor of Portfolio Adviser a year later. Previously, he worked at Incisive Media with roles across its Professional Adviser, Investment Week, Bloomberg Money and Mortgage Solutions titles. Gary has been shortlisted for various awards, winning Headline Money Investment Writer of the Year in 2010.



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