Multi-asset risk bound fund families: how to rate and select them

by Patrick Norwood
Insight Analyst - Funds

March 2018

In recent years with the market volatility we have seen there has been a shift in investors’ primary focus from return to risk. This document will take a closer look at the multi-asset funds universe and in particular risk bound funds.

These funds exist as ‘families’ – normally four or five funds run by the same fund management team, following the same investment process, but with the expected return and risk for each fund increasing across the family. 

Risk bound funds aim to maintain a risk level, or match a specific profile, over time. Doing this successfully requires the fund to adapt to market movements by adjusting the asset allocation. Even with the volatility of the market the risk profile of a risk bound fund should remain fairly consistent, enabling  advisers to align the risk attitude of their clients to the funds.

For the investor, the benefit of these types of funds is their simplicity, as it is possible for a client to invest in the same family of funds throughout their investment lifecycle.

However, there can be significant differences in structure, process and other features across the various risk bound fund families in the market, so due diligence is still very important – such funds need to be monitored to ensure that they are meeting their client’s aims and objectives on an ongoing basis, as with any other fund.

This guide is designed to help advisers identify the factors to consider in their advice process and how to mitigate some of the issues and risks involved.

The document is accredited by the CII/PFS and CISI for up to 60 minutes of structured CPD.