Taking a multi-asset approach can level out an investor's income profile, according to Goldman Sachs Asset Management portfolio manager Angus Bell.
He said diversification had a number of benefits beyond reducing volatility. Assets could be blended to take advantage of the correlations between their varying income profiles.
A portfolio should be structured and actively managed to optimise the medium-term relationships between assets, Bell said.
"In times when cash rates might be low or bond rates might be low, what you will typically see is an off-setting higher benefit from, for example, dividends on REITs and infrastructure," he said.
Assets needed to be assessed in terms of correlations with other assets in a global context and in terms of their relative attractiveness, Bell said.
He said the fixed income market was one example.
"If we were to take the lens on Australian fixed income yield relative to other developed market bond yields, there's still a considerable gap where they are relative to similar markets."
"Whilst the relationship with other domestic asset classes might not look that attractive, in the scheme of the global opportunity set, we would see Australian fixed income being supported on that basis," he said.
An active approach to tactical asset allocation would also dampen risks during periods of volatility and allow investors to take advantage of opportunities as they arise, he said.
As people started to move their capital back out of cash, wary of the volatility of the share markets and the decline in interest rates, they would seek multi-asset portfolios, according to Bell.
"Investors are clearly going to be seeking more diversification and the natural place they will look is in a fund with a broader opportunity set," he said.
