In this context, the success of the portfolio is judged primarily on its risk/return profile.
Periods of lower expected returns and higher expected risk, coupled with a static asset mix, can impact the suitability and lead to disappointment that is not experienced by investors in passive single asset class funds.
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Key Points
- Some of the logic that underpins the advantage of passive funds in the single asset space does not apply to multi-asset
- It is by no means certain that passive funds will perform better than active funds over the planned investment period
- Multi-asset funds have typically benefited from higher relative exposure to the largest capital markets – such as US equities or UK gilts
Dan Kemp is chief investment office of Morningstar Investment Management EMEA
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