Is Multi-Asset Investing a Wise Choice?

by Andrew McGuinness     Jul 16, 2019

Multi-asset investing, if you are not yet aware, involves investing in a portfolio of multiple assets. This allows for a substantially diversified portfolio, with investments apportioned to multiple different classes. Particularly in the past decade, multi-asset investing has been becoming more popular and reaching heights never before seen. The reason for this is the fact that asset classes have been found to correspond more and more with each other as time passes. Because of this, the traditional demarcations between asset classes like bonds, equity, and cash have been blurred.

The traditional asset classes are gradually being replaced by hybrid classes in order to take advantage of the newfound benefits the correlation between different assets allow for when combined. Now that you’re up to date with the subject of multi-asset investing, is it the right investment for you? Here are three reasons why multi-asset investing may be considered a wise choice.

1. As much risk as you can handle

Within multi-asset investing, there are different options you may pursue according to how many risks you are willing to take and how much you would like to put on the line. Mutual fund companies grant investors with the opportunity to allocate their funds with risk tolerance in mind.

For example, there are options to pursue a more extreme fund, or a safer one. In the case of the extreme fund, The Fidelity Asset Manager 85% fund (FAMRX) is a good example. Within this fund, 85% of your investment is stored in equities while the other 15% stays in cash and fixed income. The Fidelity Asset Manager 20% fund (FASIX), on the other hand, places 20% of your investment in stocks, 30% in the short-term money market, and a whopping 50% stays in fixed income.

2. Invest according to goals

If you are looking to reach particular goals with your money set within a limited time frame, multi-asset investing is right for you. With multi-assets, you are able to manipulate and alter your investments according to certain goals you set for your invested funds. These goals rely mainly on when you would require access to your money, your financial situation, how old you are, and especially when you plan on retiring.

As you age and have less time on your hands to risk your investments, the fund allocation becomes less risky. When a longer time period is chosen, the fund consequently becomes more aggressive or extreme in order for a larger profit to be amassed over this time period. If 2050 were to be the target for the retrieval of your investments, for example, the fund is set to put up to 90% in equities and the rest in fixed income.

3. Flexibility and adaptation

Multi-asset investments are a wise choice in that they allow for your investments to adjust according to what is going on in the market. You may properly react to market changes by making adjustments to what percentage of your investment is going toward which of your multiple assets rather than simply waiting until your investments hopefully become profitable again. This usually involves putting more into those assets that are faring better, while removing a large percentage of your investment from assets that have become riskier or have taken a blow within the market. This allows for investors to take advantage of short-term prospects of profit as well.

Multi-asset investment provides access to such a wide arrange of investment possibilities for your portfolio to enjoy, it is virtually impossible to not find a way for it to benefit you. With so many choices, flexible features, and adaptation opportunities, there is no telling how far a multi-asset investment may take you.

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