Diversification is critical to steady, long-term portfolio performance. Multi-asset strategies provide access to a wide range of asset classes, sectors, and investment options like individual securities and bonds. These strategies balance growth opportunities with risk management, ensuring the stability of your investment.
Multi-asset strategies differ from traditional diversification by not tying performance to a specific benchmark. Instead, they proactively target outcomes like returns above inflation, instilling confidence in the potential of your investment.
With a flexible approach, multi-asset portfolios can adjust to market shifts through tactical trades and dynamic allocation. This adaptability is designed to capture potential returns while minimising unnecessary risks, providing a sense of resilience to your investment.
Our portfolios are built using research that produces insight into not only future investment opportunities but also their related fundamental drivers of risk. By better understanding these forward-looking risk drivers, we can diversify portfolios for the future rather than basing these decisions on the past. Multi-asset portfolios provide you with access to the world’s leading investment opportunities and money managers through an open architecture approach.
Finding the right opportunities requires a consistent valuation framework that estimates the fair value of an asset. We’re willing to consider deeply out-of-favour assets because value opportunities can often be found where others aren’t looking, even in unattractive sectors or with companies facing recent setbacks but still having a strong foundation.
Although opportunities can be found in unloved assets, it’s critical to do the necessary fundamental research to distinguish which low-priced assets can be expected to recover, from those that will not. Investing in sectors or regions without the prerequisite due diligence can cause value traps. Analysis of the fundamental drivers needs to be combined with attention to qualitative aspects and a thorough understanding of risk.
Markets vary in the number and quality of opportunities. Sometimes, there are many good opportunities at low prices, while at other times, prices are high, and opportunities are rare. If we can’t find assets that offer good value, we hold onto cash and wait for better opportunities instead of investing in weaker options with limited prospects. Successful valuation-driven investing requires more research and less frequent buying and selling.
Asset allocation is the primary driver of both investment performance and portfolio risk. This approach looks at all asset classes globally to build diversified portfolios that span equities, fixed income and alternative investments, so as to provide exposure to a broad range of asset classes that can be weighted according to their expectations of risk and reward.
This top-down approach uses passive investments. The core holding is built using ETFs and Index Funds following our top-down investment process to achieve the right asset mix and geographical diversification, minimising the costs.
This bottom-up approach uses active investments. An overlay of active management is used to maximise returns and benefit from opportunities arising in different market conditions.
This takes into account an established risk level whilst minimising its expenses. Some asset classes offer talented portfolio managers the opportunity to outperform the market.
Other asset classes benefit less from the insights of active managers, and, in these situations, passively managed investments are used, granting exposure to these areas at a very low cost.
The overall asset and geographic allocation is researched and created by the investment committee. This is reviewed on a monthly and quarterly basis, and with the support of global analysts and high-quality data, our investment team scrutinises every investment in each portfolio for suitability and long-term potential.
Risk at a portfolio level can be complex, multifaceted, and vary over time. Our definition of investment risk – the ‘permanent loss of capital’ – means we believe one of the best ways to control for risk is to follow a clear specific process and buy fundamentally strong investments, at the right price.
Another key component for any professional investor is transparency on their investments. RisCura has created systems that monitor and analyse the key components of all investments – emphasising risk and performance.
We analyse portfolio risk using portfolio and benchmark information and the Barra Integrated global risk model, provided by MSCI Barra, who are one of the leading global providers of risk models and risk analytics. The Barra Integrated Model (BIM) is a multi-factor forward-looking risk model that was designed to provide broad coverage without sacrificing in-depth analysis.
The union of Barra’s equity, fixed income, and currency models captures complex cross-market and cross-asset class relationships while retaining the granularity of each local market model. It’s also used as a multimanager / multi-asset portfolio risk tool that allows for risk attribution at various levels such as sector, region, style, and currency.
Together with this analysis, it allows us to attribute risk across client portfolio asset allocation, using forward-looking risk metrics based on the current portfolio. We believe that human interaction remains critical, and our portfolio risk analysis highlights that it’s this combination of people and the incredible work done by risk models, that will drive even better results.
We strive to interpret model output to highlight unintended risks and improve portfolio risk management. After identifying risk sources and performance factors, we use this information to make better risk budgeting decisions on a portfolio level.
(Source: RisCura Investment Analytics)
Limitations are set on the number of funds, the minimum size of the fund, the allocation to a single manager and the allocation to one management company. We value portfolio consistency, so when we trust an asset manager’s style and philosophy, we use their approach across all our portfolios.
When creating portfolios, we have open architecture, and can invest in over 200 markets and sub-markets including:
| Equities | Fixed Income | Various Alternative Asset Classes Incl. | Over 30 Currencies Incl. |
|---|---|---|---|
| US Equity | Government Bonds | Real Estate (Global) | US Dollar |
| UK Equity | Corporate Bonds | Real Estate Investment Trusts | Pound Sterling |
| European Equity (excl. UK) | Inflation-Linked Bonds | Commodities | Euro |
| Emerging Markets | Emerging Market Bonds | Hedge Funds | Japanese Yen |
| Asia Pacific (excl. Japan) | Global High Yield | ||
| Japan |
We use different investment administrators to provide the legal framework for portfolios and to act as a proprietor of client funds, depending on the circumstances and set-up of the client’s assets. These administrators are based in highly regulated jurisdictions, such as the Isle of Man, the Channel Islands, and Switzerland. All client monies held with the custodians are completely segregated from their own corporate bank accounts. All cash available for investment with the administrators is deposited with highly reputable companies, such as UBS, Euroclear and Pershing LLC, a subsidiary of The Bank of New York Mellon.
