Beware Funds' False Promises

Outcome oriented funds, defined by return, income, and volatility objectives, have become increasingly popular - but are really no different to traditional multi-asset funds

Randal Goldsmith 9 March, 2017 | 4:06PM

Multi-asset funds are an important sector in the UK and they have seen growing inflows relative to other categories in recent years. Their popularity may be due to their suitability for individuals and independent financial advisers, or IFAs, who want to hand over the bulk of investment decisions to an investment manager.

These funds can give a false sense of comfort or oversimplify the potential risks

There are some important changes in the UK that have supported and continue to drive growth in multi-asset funds based on their suitability as complete investment solutions, including the Retail Distribution Review and the increased choice given to individuals at retirement. The RDR helps to ensure that only those investments that are suitable, taking account of clients’ circumstances and risk tolerance, are recommended.

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About Author

Randal Goldsmith  is a Manager Research Analyst with Morningstar.

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