What are multi-asset strategies? | BlackRock (2024)

FAQs

What are multi-asset strategies? | BlackRock? ›

A multi-asset investment strategy can be accomplished by investing in a variety of asset classes – such as stocks, bonds, real estate, credit, or cash – to create a more nimble and broadly diversified portfolio.

A multi-asset investment strategy can be accomplished by investing in a variety of asset classes – such as stocks, bonds, real estate, credit, or cash – to create a more nimble and broadly diversified portfolio.

For example, a multi-asset class investor might hold bonds, stocks, cash, and real property, whereas a single-class investor might only hold stocks. One asset class might outperform during a particular period of time, but historically, no asset class will outperform during every period.

Historically, the three main asset classes have been equities (stocks), fixed income (bonds), and cash equivalent or money market instruments. Currently, most investment professionals include real estate, commodities, futures, other financial derivatives, and even cryptocurrencies in the asset class mix.

Multi-strategies combine different single hedge fund strategies in one portfolio and differentiate considerably from each other. Most often, such portfolios include a variety of long-short, relative value and event-driven strategies.

Examples of strategic assets include quality, reputation, managerial skills, brand recognition, patents, culture, technological capability, customer focus, and superior managerial skills (Barney & Zajac, 1994; Castanias & Helfat, 1991; Chakraborty, 1997; Hawawini, Subramanian, & Verdin, 2002; Kogut & Zander, 1993).

The most common dynamic asset allocation strategy used by mutual funds is counter-cyclical strategy. These funds increase their equity allocation (reduce debt allocation) when equity valuations decline (become cheaper) and reduce debt allocations.

Relative risk strategies target a percentage allocation to equities so the risk and return of the strategy is in consistent relative proportion the (ever-changing) risk and return of the equity markets. This is the most common approach to multi-asset strategies. Put differently, asset weights drive portfolio risk.

Multi-asset funds can offer investors exposure to a broader range of assets, sectors, strategies and direct investment exposures (e.g. individual securities, bonds) with greater flexibility. They are diversified across both traditional and non-traditional asset classes, such as real estate and infrastructure.

BlackRock's systematic alternative strategies seek differentiated risk and return profiles with low correlation to broad asset classes to help diversify 60/40 portfolios.

What are the 5 P's of asset management? ›

Understanding the 5 P's of asset management can provide a structured approach to managing assets effectively. This article delves into the 5 P's—Planning, People, Processes, Performance, and Portfolio—and how they contribute to a robust asset management strategy.

One of the best ways to create wealth for your long-term goals is to invest in equities. There are many examples of stocks that have multiplied investors' wealth over time. For example, the Indian non-banking financial company Bajaj Finance has delivered an annualized return of over 44.1% in the last 15 years.

To summarize, effective asset management revolves around the three interconnected pillars of inventorying assets, assessing conditions and hazards, and maintaining assets.

Multi-asset allocation funds provide investors with a single investment that combines debt, equities, and one additional asset class such as real estate, gold, and so on. Furthermore, these schemes employ various asset allocation algorithms that are designed to respond to changing market situations.

To manage/help manage the asset allocation for a suite of multi-asset, multi-manager portfolios and oversee the buying and selling of investments with a heavy emphasis on risk management. To support the Investment Committee's evaluations and decisions with ad hoc analysis related to the current or prospective products.

If you sell such funds after holding them for more than 3 years, then you have to pay income tax at the rate of 20 per cent on the profit made on it. But if you make profits after holding such funds for less than 3 years, then you will have to pay tax on the profits as per the income tax slab.

Multi-asset trading refers to trading various financial instruments within a single trading portfolio, such as stocks, bonds, commodities, currencies, and derivatives.

Approach to asset allocation: Multi-asset allocation funds seek to maintain allocation to different asset classes within a specified range. Balanced advantage funds dynamically adjust their allocation based on market conditions from time to time.

What are multi-factor strategies? In contrast to single-factor strategies, multi-factor smart beta strategies provide investors with exposure to all or a subset of the value, quality, low volatility, momentum and size factors.

A multi asset allocation fund can help manage risk by investing in multiple asset classes and varying the exposure to each based on market conditions. However, it is important to assess your risk appetite before choosing a fund. It is best to consult a financial advisor before making any investment decisions.