Nine out of ten investors set to increase allocations to multi-asset credit strategies

Almost nine out of ten pension funds, other institutional investors and wealth managers could increase their allocations to multi-asset credit strategies over the next two years, research from Aeon Investments has found.

The survey of over 100 global senior investment managers with a total of $545bn assets under management, found that 62 per cent of institutional investors and wealth managers are planning to increase allocations to multi-asset credit strategies, while 24 per cent expect to make dramatic increases to the asset class between now and 2025.

Nearly all (96 per cent) respondents agreed that multi-asset credit strategies can successfully diversify portfolios away from traditional fixed income asset classes, such as corporate and government bonds, with more than a third (37 per cent) strongly agreeing.

More than two-fifths (43 per cent) of those questioned, said the strategy can offer optimal investment outcome through the current economic cycle.

Another third (37 per cent) picked superior risk-adjusted returns from multi-asset credit — versus standalone credit strategies — as the most important benefit. 12 per cent say active management and tactical rotation across diversified credit assets is the most important benefit, while 6 per cent say it is that multi-asset credit strategies are better positioned to capitalise on relative value, short-term mispricing and dislocations.

When asked about their preferences for multi-asset credit investing, 43 per cent of investors chose a single manager offering a well-diversified strategy.

One third (32 per cent) prefer a multi-manager through third party fund of funds and one fifth (21 per cent) say bespoke mandates based on their own risk and return requirements are the most appropriate vehicle. Only 5 per cent employ specialist managers for each strategy.

Aeon Investments head of portfolio management Khalid Khan said multi-asset credit strategies offer a multitude of benefits for investors.

"In addition to providing important portfolio diversification, they also give the opportunity for superior returns irrespective of the market environment," he continued.

“The level of innovation in the sector is increasing dramatically, with more strategies available to professional investors. This is leading to an increase in allocations.”

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