Investors continue to face volatile markets while struggling to earn yield in a low interest rate environment. Share prices are buffeted by geopolitical insecurities, concerns about China’s economic growth, unsustainable levels of public and corporate debt, weak commodity prices and vulnerable emerging market currencies.
Now there is the prospect of a tougher monetary stance by the US Federal Reserve that might reverse the flow of cheap liquidity that has depressed yields and inflated some asset markets, but which could stifle incipient global economic recovery.
In these uncertain times, NN Investment Partners believes that diversified multi-asset strategies are a particularly attractive proposition in order to optimise performance from likely divergent returns by markets in different countries and industrial sectors as well as by types of financial securities.
In fact, investors should consider diversified multi-asset strategies at all times. Historically, return disparities between and within asset classes can be significant, and recognition of these differences has led to substantial investor flows into funds with broadly defined mandates.
NN Investment Partners has a flexible multi-asset approach that typically combines a strategic, longer-term portfolio with a tactical, more short-term allocation.
The strategic portfolio aims to capture the long-term risk premiums on asset classes while mitigating downside risks due to unexpected shocks. As long as financial markets offer investors premiums for their willingness to take risk, it makes sense to make a structural allocation to a diversified basket of these assets.
However, although a robust exposure to a range of asset classes pays off in the longer term, returns obviously vary in the short term. Tactical asset allocation (TAA) is therefore a crucial source of return and can be a major contributor to the total return of an investment portfolio.
NN Investment Partners offers various multi-asset strategies for its clients. Their common denominator is that the performance is driven by the TAA views of the multi-asset team, composed of experienced portfolio managers, strategists and economists who together conduct rigorous research, come to informed judgments and act on anticipated market developments.
A proprietary methodology that combines fundamental analysis with behavioural analysis is the engine that drives the qualitative investment discussions. This combination of “human and machine” is key to the success of the team.
Investors should carefully review their portfolios and ask themselves if they are sufficient to cope with the continued uncertainty in both bond and equity markets. We believe flexible, diversified multi-asset portfolios are an attractive alternative for all types of investor.
Valentijn van Nieuwenhuijzen is head of multi-asset at NN Investment Partners
This document is for informational purposes only and is not the basis for any contract to deal in any security or instrument, or for NN Investment Partners (Singapore) Ltd (“NNIP SG”) or its affiliates to enter into or arrange any type of transaction as a consequence of any information contained here. It shall not be construed as the making of any offer or invitation to anyone in any jurisdiction in which such offer is not authorized, or in which the person making such offer is not qualified to do so, or to anyone to whom it is unlawful to make such an offer. Although the information in this document was compiled from sources believed to be reliable, no liability for any error or omission is accepted by NNIP SG or its affiliates or any of their directors or employees. The information and opinion contained here may also change. NN Investment Partners (Singapore) Ltd | Company registration number: 199602506R