How to Benchmark a Multi-Asset Fund

It can be difficult to judge the performance of multi-asset funds, says Dan Lefkovitz, but Morningstar Target Allocation Indexes aim to set a standard

Dan Lefkovitz 23 November, 2020 | 11:43AM

benchmark

Ever since the global financial crisis of 2008, investor money has flooded into funds that combine stocks, bonds, and other asset classes. According to Morningstar data, assets in multi-asset mutual funds and ETFs reached $4 trillion in 2020, up from roughly $1 trillion in 2008. While they go by different names and come in varying shapes and sizes, these multi-asset funds share built-in asset allocation and often target an objective. As they say at industry conferences: today’s investors prefer “solutions over products”.

But while multi-asset strategies have many positives, they present a real challenge when it comes to benchmarking. Defining the investable universe in a way that allows measurement is a difficult task. Multi-asset investment managers respond with a wide range of solutions and the result is a muddle for investors.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Dan Lefkovitz

Dan Lefkovitz  is strategist for Morningstar’s Indexes group

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