Diversified managers banking on more beta
Funds managers operating within the diversified investments category are taking on more ‘smart' and tailored beta positions within their portfolios and are also making more frequent changes to their strategic asset allocation (SAA), according to research released by Zenith Investment Partners.
In the process of reviewing the single-manager diversified category of fund managers, Zenith found that fund managers were "more willing to incorporate discrete asset-class exposures including ‘smart' and tailored beta", as these had appeal to investors and in a multi-asset environment could improve portfolio efficiency.
Zenith said the willingness of managers to change their SAA was not an ordinary expectation because of the long-dated assumptions on which SAA's are based. This willingness to change was indicative of "the more dynamic nature of investment markets in which asset-class correlations may be subject to meaningful change".
Zenith also said managers in the sector review had focused on duration management and were concerned about rising market rates, so had reduced their interest rate sensitivity within their fixed interest allocations.
According to Zenith "this has largely been achieved through a move away from longer-dated fixed interest exposures in favour of those that target a low duration".
As a result of the review, funds from Schroders, Perpetual, BlackRock, BT Wholesale and Vanguard were given a Recommended rating. Funds from Aberdeen, BT, Colonial First State, Dimensional, Goldman Sachs and Perennial received Approved ratings. A number of UBS funds were either still under review or had a rating pending.
Zenith senior investment analyst Andrew Yap said "the single-manager category continues to offer to investors a range of investment products that span traditional SAA-only funds and those that incorporate active asset allocations strategies in an effort to enhance portfolio outcomes."
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