Multiasset strategies and managers seem to be suffering, whether it's due to their own success or poor performance, however, has sources split.
These strategies had been growing in popularity over recent years, with many money managers jumping on the bandwagon and creating these go-anywhere investment vehicles.
Data provided by EPFR Global show all balanced strategies tracked by the firm recorded $31.6 billion in net outflows year-to-date through Nov. 14, compared with net inflows of about $21 billion for 2017. All total-return strategies recorded net outflows of about $10.3 billion for 2018 through Nov. 14, which followed net inflows of around $50.7 billion in 2017.
Some money managers are open about the fact that they have seen multiasset business reduce — albeit for good reasons, they said.
"We are seeing clients saying 'thanks very much, we are done,' " said Hani Redha, London-based multiasset portfolio manager at PineBridge Investments LLC. "(They are) gliding toward derisking, a more (liability-driven investment) path. So we see them walking away from multiasset. They partially redeem and derisk. The strategy is quite high growth; it's hard to see a client walk away,'' he said.
But if that happens, it's because the managers have done their job and he's fine with that. The multiasset team runs $13.1 billion. In 2018, PineBridge multiasset will have positive net inflows, according to information from the firm.
Kishen Ganatra, London-based European strategic research director at Mercer Ltd. in London, said there are two stories playing out in multiasset flows.
He said it is first important to break multiasset into two buckets — core and idiosyncratic. "With core you have almost an all-in-one portfolio — equities, bonds and some alternatives. The typical point of it is to be an all-in-one solution for a small client, managing their whole growth portfolio," Mr. Ganatra said.
These strategies can form part of a defined benefit fund portfolio or the default fund for a defined contribution plan.
"Idiosyncratic is more about low exposure to traditional markets — equities and bonds — and adding idiosyncratic and more relative value or hedge fund-type (assets) to act as a diversifier to a portfolio." He said these typically form part of a fund's alternatives allocation.
He agreed with Mr. Redha that derisking has created a speed bump for core strategies. "The core space has struggled recently, especially in DB land, as investors are derisking (and have) less need to hold these traditional market exposures. They are coming out of growth assets, maybe out of core (diversified growth funds — another name for these types of assets) and going more into matching assets."
He said that is less true for idiosyncratic strategies.