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A Case for Multi Strategy

Why should Multi Strategy portfolios form a more prominent allocation for investors in future?

15 Sep 2023
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.
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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.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

 

Past performance does not predict future returns. 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.

 

The information in this article does not qualify as an investment recommendation.

 

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Volatility
15 Sep 2023
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.