Multi-asset  

Guide to managing a multi-asset portfolio in a crisis

  • Explain how to build a multi-asset portfolio
  • Identify ways to future-proof a multi-asset portfolio
  • Explain what is meant by diversification
CPD
Approx.60min
Guide to managing a multi-asset portfolio in a crisis

Introduction

By David Thorpe

While it may be difficult to endure at the time, a market plunge can teach investors plenty about the state of their portfolios. And so it has proven this year: the Covid-19 pandemic may not be over yet, but managers are already putting the lessons of early 2020 to good use.

At the same time, there are still plenty of unanswered questions. Assets such as government bonds have shown the resilience again this year, but there are many who doubt their future role in portfolios.

These doubts centre on their viability as diversifiers - their role as income-paying assets having long since expired - and diversification undoubtedly remains the watch-word for multi-asset strategies at the moment.

Income investors have problems of their own to deal with, now that swathes of companies the world over are cutting dividends. 

In this guide we discuss these issues, examine how investors are preparing their balanced portfolios for the medium and long-term, and ask what's next for multi-asset investing.

It is worth an indicative 60 minutes of CPD.

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. True or false. Risk is about the propensity of the price of an asset to move up or down frequently, while volatility is about a permanent loss of capital.

  2. Why does David Coombs say that investors should not get into a habit of focusing on the volatility of each line item in their portfolio?

  3. True or false, according to Dean Cheeseman, what defines an asset as alternative is exhibiting different return drivers and income streams from traditional equities and bonds, while also offering lower correlation with the primary two asset classes.

  4. What is one of the reasons why the US Dollar performs well when uncertainty is at its height?

  5. True or false, when Keith Balmer says a major mistake being made by some investors is that they “reach for yield” and take more risk than is appropriate in order to achieve a higher yield.

  6. According to Dean Cheeseman, what does a focus on ESG considerations give the portfolio manager?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Explain how to build a multi-asset portfolio
  • Identify ways to future-proof a multi-asset portfolio
  • Explain what is meant by diversification

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