And, judging by the three that hit inboxes on Monday and the one that came out last week, some clear trends are evident.
The new M&G Global Floating Rate High Yield Fund has designed to take advantage of a rising rate environment that is expected to begin within the UK and the US in the next few months.
The Matthews Asia Strategic Income UCITS Fund aims to take provide investors with access to the Asian bond markets, which lead manager, Teresa Kong, fund points out, tend to be underinvested in by western investors. Partly, she says, because: “widely used global debt benchmarks generally allocate to the most indebted countries as opposed to the most creditworthy."
"Dedicated Asian fixed income allocations enable investors to potentially create a more diversified exposure across interest rate, credit and currency while enhancing the overall risk-return profile of a fixed income portfolio,” she adds.
The Architas Diversified Real Assets Fund, which is initially only available to the UK’s wholesale and institutional market aims to provide, the group says: “a broad range of longer-term alternative assets and is designed to provide both a return that is lowly correlated to equities and bonds and a relatively high level of income, currently almost 4%.”
As Architas CIO and manager of the fund, Caspar Rock, puts it: “The traditional negative correlation between equities and bonds has also failed to protect investors during recent market stresses and the inclusion of real assets has increasingly been seen as a way to provide an element of protection within traditional portfolios.”
The fourth fund, a frontier markets fund launched by VAM, is more of an outlier as it is less focused on income and more on growth. But, its goal is to exploit the high growth potential of frontier economies, which fits the broad diversification theme that runs through the other launches.
And there is no question that diversification is a word on the lips of many portfolio constructors, as they seek to play a little bit more defence.
Diversification
Tom Beckett, CIO at Psigma, told Portfolio Adviser, the group is more diversified now than it has ever been.
“Short term calls are incredibly difficult at the moment,” he says, “every time it looks like you are going to get a correction soothing words are spoken by central bankers or politicians and markets seem to quieten down.”
Nonetheless, Beckett says, in a bid to better weather-proof the portfolios he has diversified across the fixed interest spectrum and, within equities has exposure to more large caps than he has had for a while.
He has also raised the firm’s cash holdings, partly as a defensive play but also because at the moment, he is seeing more things he is close to selling, than assets he is considering buying.
Justin Onuekwusi, multi-asset fund manager at Legal & General agrees that diversification is important at the moment, especially in the fixed income space.
“The next big drawdown on equities is going to be interesting because we are entering rising rate environment,” he says, adding: “you really want to have a diversified fixed income exposure, especially to things like short duration bonds and loans, areas that will do well in a rising rate environment.”
But, adds: “If equities and fixed income fall together the most defensive you can be is in cash because even with a diversified fixed income exposure, unless you are short duration you are going to get hurt.”
The key he says, is to stay active and not just blindly hold assets across an allocation.
A slightly different note
Rob Burdett, co-head of multi-management at F&C takes a slightly different approach, saying that while diversification within fixed income is useful, the group is of the view that currently strategic bond funds are the way to go within a shrunken allocation to fixed income.
“Currently we are underweight bonds, neutral equities and filling in the gaps with things like infrastructure," he says.
But, he adds, “We feel we should be overweight equities. We have been impressed by how robust the market has been given all the macro and political shocks. It feels as though the basic supply and demand for equities is positive, but that has yet to happen. We are waiting for a correction before going i.”
It is clear that the current market offers few easy answers, but as people return to their offices, hopefully with a new perspective on things after some time away, the one thing they are able to look forward to is more choice and if you are looking for diversification that is not a bad thing.
