In our most recent Parameters Survey, paraplanners said multi-asset funds continue to feature heavily in client portfolios, valued for their simplicity, flexibility and, increasingly, their usefulness in tax-conscious planning.
Multi-asset funds continue to feature heavily in client portfolios, with three-quarters of respondents to our latest parameters survey saying they use them frequently.
When asked how often multi-asset funds are used in the portfolios they work on, 39% said they are a core component of most portfolios, while a further 36% said they are used regularly, although not as the dominant investment solution.
Just 18% said they use multi-asset funds occasionally for specific client needs, with only 7% using them rarely or not at all.
The results suggest that while advisers today have access to a growing range of investment options – including model portfolio services and bespoke discretionary management, multi-asset funds continue to occupy a significant place within many firms’ investment propositions.
Multi-asset funds are far from niche
Perhaps the most striking theme from the qualitative responses is just how widely multi-asset funds are being used.
Many respondents described them as suitable for “all clients”, “almost all clients” or “90% of our clients”. Others said they form part of a centralised investment proposition or are used within model portfolios.
Several reported using multi-asset funds across a broad spectrum of investors, from clients building wealth through pensions and ISAs to those in retirement drawing an income.
One respondent said they are used for all clients “from modest to HNW”, while others described them as being appropriate for clients with varying attitudes to risk.
Taken together, the responses suggest that many firms no longer view multi-asset funds as a specialist solution but as a mainstream option capable of meeting a wide range of client needs.
Simplicity still matters
A recurring theme throughout the comments was simplicity.
Many respondents said multi-asset funds are particularly useful for clients with straightforward requirements, lower portfolio values or those who want an uncomplicated investment solution.
References to portfolios below £100,000 were common, as were comments relating to cost-conscious clients and transactional business.
For some firms, the attraction appears to lie in the ability to access a diversified portfolio through a single vehicle, reducing administration and ongoing oversight while still delivering an investment strategy aligned to a client’s risk profile.
Several also highlighted their use within workplace pensions and legacy arrangements, where practicality and ease of management can be important considerations.
Tax is increasingly part of the conversation
Beyond simplicity, tax efficiency emerged as one of the top themes from the survey.
A number of respondents highlighted the role multi-asset funds can play within General Investment Accounts, particularly where there could be capital gains tax implications.
Some described using multi-asset funds instead of model portfolio services where CGT management is a priority, while others referred to using “mirror” multi-asset solutions that replicate the risk characteristics of an MPS without the same level of trading activity.
One respondent noted that multi-asset funds have become more attractive given the “greater CGT implications for MPS portfolios within GIAs”, a sentiment echoed elsewhere in the responses.
The findings suggest that recent changes to the tax landscape may be reinforcing the appeal of multi-asset funds in certain circumstances, particularly when looking to balance investment management with tax planning considerations.
Sitting alongside MPS rather than competing with it
The responses also indicate that many increasingly see multi-asset funds and model portfolio services as complementary rather than competing solutions.
Many respondents referenced using multi-asset funds where a client is not suitable for an MPS, where costs need to be contained, or where a discretionary approach is difficult to justify.
Others talked about use cases involving corporate investments, onshore bonds and smaller portfolio sizes. In these situations, multi-asset funds are often viewed as a practical way of delivering a professionally managed investment solution without introducing an additional layer of cost or complexity.
Rather than replacing model portfolios, multi-asset funds frequently appear to be occupying those parts of the client bank where advisers need flexibility.
A solution that continues to evolve
While multi-asset funds have been part of the toolkit for many years, the survey responses suggest their role continues to evolve.
They remain a popular option for those seeking simplicity and diversification, while their use is also expanding in areas such as tax management and smaller client portfolios.
At a time when firms have more investment solutions available than ever before, multi-asset funds appear to have retained their relevance by adapting to the practical challenges being faced today.
The survey findings suggest that, for many firms, they remain a well-established part of the investment proposition – not because they are the only option available, but because they continue to solve a range of real-world planning and portfolio construction challenges.
Main image: pencils, multi, colour, agence-olloweb-Z2ImfOCafFk-unsplash
