Why multi asset funds? Explained simply
Shares, bonds, property and cash behave differently from year to year. A short video on why we often use multi asset funds.
What the video covers
- 0:14 The problem with holding one asset class
- 0:34 The building blocks: shares, bonds, property and cash
- 1:04 Different assets, different years
- 1:22 An example: a market fall
- 1:54 What you get in practice
In short
If you hold only one type of asset, you depend on that one market. When it has a bad spell, everything you hold feels it. A multi asset fund spreads your money across several asset classes in a single fund.
Shares offer growth potential but can be bumpy. Bonds tend to be steadier and can provide income. Property and other assets can add different sources of return. The best performer changes from year to year, and it is very hard to predict which will lead next, so rather than guess, a multi asset fund holds a mix.
The video uses a simple, illustrative example of a market fall. If shares fell 20% a portfolio held entirely in shares would need a 25% rise to recover. A blend of 60% shares, 30% bonds and 10% other assets, using assumed falls of 20%, 5% and 15%, would fall 15% and need about an 18% rise. These figures are assumptions for illustration only, not a prediction, and a blended portfolio can still fall in value.
A multi asset fund is mixed for a chosen risk level and rebalanced for you, so it is simple to hold and review. A blend spreads risk; it does not remove it. The right mix depends on your goals, and that is where advice comes in.
Related videos
- The Efficient Frontier explained simply: the theory behind blending
- Active, passive and a third type of fund you might not know
- All of our videos
- Our investment management service
Illustrative example only. It is not advice or a prediction of future returns. Asset class rankings in the video show order only and are based on index returns in GBP to 31/12/2025. Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets beyond our control. Investments and the income from them may go down as well as up and you may get back less than the amount invested. Past performance cannot be used as a reliable prediction of future performance. Diversification does not ensure a profit or protect against loss.
