Managers continue to be bullish on multiasset class strategies, particularly outcome-oriented and customized solutions, despite tepid institutional investor response of late.
In fact, some are moving to expand capabilities, believing that investors now are starting to look for more customized approaches. The growth of target-date funds in particular, a multiasset strategy, is helping fuel that optimism.
New York-based management consulting firm McKinsey & Co. Inc. projects that multiasset class strategies should experience net inflows of $1.2 trillion over the next five years.
Count T. Rowe Price Group Inc. among the true believers. The Baltimore-based manager is one of a number of firms that are beefing up their multiasset businesses. The firm has added 12 team members to its $241 billion multiasset business as of Oct. 31, and plans to add another 20 before the end of 2017.
“We went through an integrated planning process to identify priorities. So we looked at trends and strengths, and multiasset came out as one of our key priorities,” said Sebastien Page, co-head of T. Rowe's asset allocation group. He added that T. Rowe's multiasset business has grown over the last few years, and is projected to see inflows, based on the firm's research.
Of T. Rowe's multiasset business, $188.6 billion is in target-date funds.
Jeff T. Hussey, global chief investment officer at Russell Investments, said in a phone interview that his firm continues to see growth in the multiasset arena, mainly because of the low-return market environment, pension funds seeking “more dynamic management rather than setting up guardrails” and investors looking at more esoteric areas such as local currencies or bank loans.
“We've seen 30% growth over the last five years within Russell,” Mr. Hussey said. “We're really hitting our stride in helping our clients figure out multiasset.”
Russell has recently launched new multiasset strategies and added to the multiasset team. “Investors are moving toward outcome-oriented investing and multiasset is a key part of that. It's this notion of getting closer to clients,” Mr. Hussey said.