What is Multi-Asset Fund?

Full Definition

A multi-asset fund is an investment fund that holds a mix of different asset classes -- typically some combination of equities (shares), bonds, property and cash -- within a single fund, rather than an investor having to buy separate funds for each asset class and manage the mix themselves. The aim is to provide diversification and a smoother overall return profile in one product, since different asset classes often behave differently in the same market conditions (for example, government bonds have historically tended to hold up better than shares during equity market falls, though this relationship is not guaranteed and can break down). Multi-asset funds are commonly sold with a stated risk level or target allocation -- for example, a "cautious" fund might hold mostly bonds and cash with a smaller equity allocation, while an "adventurous" or "aggressive" fund might hold mostly equities -- and many are actively managed, with the fund manager shifting the balance between asset classes over time based on their view of markets, while others follow a fixed or lightly-managed target allocation. They are widely used within workplace pensions and self-invested personal pensions as a simpler one-fund option for savers who do not want to select and rebalance individual funds themselves, and within default pension lifestyling strategies that gradually shift savers from growth-focused multi-asset funds towards lower-risk multi-asset or cash funds as retirement approaches.

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