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Past performance is passé when it comes to multi asset funds

So what should advisers be looking at when it comes to selection? [Hint: it isn’t cost]


Multi-asset funds that consistently deliver on their objectives have replaced past performance as being the most important factor when selecting a fund, research from Momentum Global Investment Management found.

A survey by Momentum in 2019 revealed that 49% of UK financial advisers perceived past performance to be the key factor in their assessment of a multi-asset fund.

But according to the most recent survey of 200 UK financial advisers, this has dropped to 30%, just behind the 31% who felt the most important factor when looking at a multi-asset fund is that it consistently delivers on its objectives.

Also falling down the pecking order of importance is cost, from 42% in 2019 to 29% in the most recent survey. Meanwhile, as was the case in 2019, top holdings and asset allocation (17%) and high beta (11%) ranked relatively low in the most recent poll.

Risk management was also cited as a key criterion by one-in-three advisers (31%), while just 15% cited brand as an influential factor in their fund selection process.

Steve Hunter, head of marketing and distribution at Momentum UK, said the fact that delivering on the investment outcome was cited as the most important factor in driving fund selection, chimes with what advisers have said is currently driving their client’s satisfaction.

“The last couple years have been challenging for advisers and their clients, so it’s encouraging to see greater balance and diversification in portfolios as advisers persevere to preserve, protect and grow client assets,” he said.

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