A Case for Multi Strategy
Why should Multi Strategy portfolios form a more prominent allocation for investors in future?
1 minute read
Key takeaways:
- Investors have become familiar with uncertain environments, where asset prices rise or fall in concert with government and central bank monetary policies, or where market sentiment is hit by significant single-factor events (eg. Fukushima, COVID-19, etc).
- History shows that periods of acute market stress can cause pricing for otherwise seemingly diversified assets to synchronise. Seemingly unrelated investment strategies can become highly correlated, with the associated risk premia widening across the board.
- As we shift from a focus on inflationary fears to growth uncertainty, investors might consider alternative strategies with diversified drivers of performance that are uncorrelated to stocks, both in theory and in practice.
Whatever form it takes, markets remain vulnerable to a sudden global catalyst capable of triggering a potentially significant correction. In this environment, there is a strong argument for investors to adopt a different approach to constructing risk-adjusted, return-seeking portfolios, particularly those heavily reliant on single asset classes. Here, we discuss the key considerations for constructing diversified Multi Strategy portfolios, anchored on a portfolio protection strategy, to help meet investors’ needs – with a particular note on pricing structures.
This information is issued by Janus Henderson Investors (Australia) Institutional Funds Management Limited (AFSL 444266, ABN 16 165 119 531). The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Whilst Janus Henderson Investors (Australia) Institutional Funds Management Limited believe that the information is correct at the date of this document, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson Investors (Australia) Institutional Funds Management Limited to any end users for any action taken on the basis of this information. All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson Investors (Australia) Institutional Funds Management Limited is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect.