Are multi-asset funds the best investment option for beginners?
In this video we’ll explore the benefits of multi-asset funds for beginner investors including four benefits of multi-asset funds and three things to consider before making your first investment. We take a look at six different examples of multi-asset funds across a variety of sectors and risk levels.
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In this video we’ll explore the benefits of multi-asset funds for beginner investors. As the name suggests, multi-asset funds are investment funds that can invest in a number of different asset classes — such as equities, bonds, commodities, property and various other specialist assets.
There are four key reasons why multi-asset funds can be an excellent choice for beginners.
- Diversification — Multi-asset funds offer built-in diversification by investing in a variety of asset classes. This diversification helps reduce the impact of any single investment’s performance on your overall portfolio.
- Risk management — By spreading investments across different asset classes, multi-asset funds can help manage risk. When one asset class underperforms, others may perform better, providing a cushion against market volatility.
- Professional management — Instead of having to think about how much to invest in each asset class and constantly reviewing your portfolio, the joy of a multi-asset fund is that a professional investor does this for you – adjusting the mix according to the market environment.
- Convenience — Investing in multi-asset funds is convenient for beginners. You can start with a relatively small amount of money, and the fund manager handles the buying, selling, and rebalancing of assets, saving you time and effort.
While multi-asset funds offer many advantages, there are a few things beginners should consider:
First is risk appetite. Like all investments, multi-asset investments come with a sliding scale of risk. It’s important to assess your own risk appetite and choose a multi-asset fund that aligns with your comfort level.
Second, as with all investments, it’s important to identify your investment goals, whether you’re focusing on long-term growth, income or capital preservation. Different multi-asset funds will have different focuses so it’s important to choose one that suits your personal goals.
Third, consider fund performance. While past performance is not indicative of future results, it can provide insights into how a fund has performed in various market conditions. It’s important to make sure that the fund performance is indicative of the fund manager’s performance as well. The ten-year track record might be excellent, but if the manager changed last year, that’s probably not a good indication of their abilities.
The number of assets that multi-asset funds invest in can vary from fund to fund, so it’s important to do your research and carefully read the information about each one. Let’s take a look at a few examples:
In the Mixed Investment 20-60% Shares sector, you have the Elite Radar Ninety One Global Income Opportunities fund. This fund focuses solely on a combination of equities and bonds. On the other hand, there’s the Elite Rated Jupiter Merlin Income Portfolio fund, which invests in other funds. This is sometimes referred to as a ‘fund of funds’.
If you’re looking for a bit more risk, you might consider funds that can invest between 40% to 85% in equities, like the BNY Mellon Multi-Asset Balanced or Liontrust Future Sustainable Managed funds.
Now, if you’re seeking flexibility in your investments, you might want to explore the TB Wise Multi-Asset Growth fund. It falls into the IA Flexible sector, which means it has the freedom to invest in various types of asset classes without the constraints on equities mentioned earlier.
Lastly, there are multi-asset funds in the Volatility Managed Sector. Similar to the flexible sector, these funds can invest in different asset classes without specific equity constraints. However, their main goal is to manage returns within specific volatility parameters. One example is the Rathbone Strategic Growth Portfolio.
In conclusion, multi-asset funds offer diversification, risk management, professional management and convenience making them a compelling investment option for beginners. However, remember to consider your risk appetite, investment goals, and fund performance before making your decision.
To find out more about multi-asset investments and start your research today, visit fundcalibre.com
This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.
