The case for multi-asset
Weaker growth trends, aging populations and record low yields create a world full of challenges for institutional investors. Pension funds and insurance companies need healthy returns to deliver on their “promises” to clients, but are confronted with an age where attractive returns are more scarce than ever before. Moreover, tighter regulatory requirements have further reduced the opportunity set for institutional money managers.Navigating Markets
In this challenging environment multi-asset solutions offer an effective way to navigate through uncertainty while at the same time being able to exploit opportunities in a risk-aware manner. Multi-asset solutions provide access to a transparent investment approach that utilizes multiple and globally diversified returns sources. Also, it can easily be executed by using liquid instruments that create maximum flexibility for both client and portfolio manager. As a result, these investment strategies help institutional investors to adapt to continuously changing circumstances. Crucially important in this respect is that multi-asset solutions provide more robustness in periods of stress than most other investment alternatives.
Adaptability for better outcomes
The best answer to the current investment uncertainty is to have a stronger focus on absolute return goals and total portfolio risk characteristics. Robust portfolios which digest unexpected shocks better than in the past can be created by managers who understand how the complexity of this environment creates uncertainty that is not easily captured in a traditional “risk” number. At the same time, the opportunities that this uncertainty also creates needs to be exploited in a rigorous and innovative way by utilizing both experience in markets and open-minded team thinking.
By embracing these beliefs and continuously learning and adapting in an ever-changing world NN Investment Partners offers institutional investors a reliable, attractive and comfortable gate to global markets and the future returns they can bring.
How can institutional clients benefit from multi-asset?
Flexibility - It provides easy access to a wide diversity of return sources with higher flexibility, robustness, liquidity and lower costs than most “Alternatives”. Our multi-asset strategies are designed to quickly respond to changing market conditions.
Return-oriented - Multi-asset solutions satisfy the client need for relatively stable returns with a pure focus on absolute or total return within clearly articulated risk parameters and a strong focus on drawdown management.
Credibility - What we say is what we do. The views we share on the global economy and asset allocation are fully aligned with the positioning in our multi-asset solutions. This provides credibility to the views we share with clients.
Partnership - Our views and expertise can also be shared in a more tailored format with client to create a genuine partnership. Our experience with managing multi-asset strategies enables us to guide clients on tactical asset allocation decisions, instrument selection/portfolio construction challenges, all taking into account regulatory and client specific requirements.
Diversification - Multi-asset solutions provide a strong diversifier for institutional investors and can offer an alternative for traditionally “defensive” fixed income exposures. The realized volatility in recent year of risk aware multi-asset strategies is comparable to bond portfolios, but looking forward the estimated risk distribution of fixed income portfolios is much more skewed to the downside.
Innovation - Continued learning and enhancing is applied within our approach, both in the management of portfolios and the design of new products. This shows in the use of Big Data (social media, digital news), embedding of ESG criteria, focus on Income generation and applying the factor investing approach to multi-asset space.
Innovative strategies with strong and robust performance
Our multi-asset strategies can be divided in benchmark oriented strategies and outcome oriented strategies.
Our flagship multi-asset strategies First Class Multi Asset (FCMA) and First Class Multi Asset Premium (FCMA Premium) are benchmark unaware with limited constraints. They both aim for capital growth by dynamically investing in various asset classes and aim for pre-defined returns. The FCMA strategy has a lower risk profile than FCMA Premium strategy. First Class Yield Opportunities is a fixed income multi-credit strategy.
One of our recent launches of an outcome orientated multi-asset strategy is the Multi-Asset Factor Opportunities strategy. This strategy is purely based on the benefits of factor investing. This strategy aims for a positive return in all market circumstances by allocating to different factors such as value, carry, momentum, flow and volatility.
The multi-asset heritage of NN Investment Partners
Being outward-looking and open-minded is part of our culture. A desire to explore the world and an eagerness to trade in international markets are part of the Netherlands’ roots and have been instrumental to the nation’s progress.
This heritage is still reflected in our thinking about global capital markets today. Exploring global markets offers amazing opportunities, but understanding both the fundamental and emotional drivers of these markets is crucial in navigating through the uncertainty that will always be attached to the future of those markets. This awareness shines through in our long and fruitful tradition in managing multi-asset strategies. We delivered strong results in this space and received numerous awards for a number of our funds. We offer a broad range of strategies, funds and tailor made solutions with specific risk-return profiles suited for the whole market cycle.
All solutions are centered around our conviction that excellence comes from the ability to continuously fine-tune the investment processes in order to achieve the best possible results. When market conditions change, we adapt to the latest insights. We will leave no stone unturned that contributes to this forward-looking and proactive investment process. Currently we have around Eur 20 billion in multi-asset strategies.
Professional multi-asset team with cutting edge approach
All strategies benefit from the high-quality allocation views of our experienced multi-asset team, which has an innovative approach. Big data, social media, behavioral insights, economic trends, next to the more traditional fundamental and technical indicators, are part of our cutting-edge investment toolbox.
We see global markets as a complex adaptive system, a network where constant interaction and influences between its nodes takes place with an eventual outcome that is highly uncertain. To make the best investment decisions in this environment, adaptation and innovation are key. Using big data to analyze Social Media to better understand market emotion, for example, or applying “machine” rigor on information flows to augment human insight and experience - all this information funnels into strong-conviction investment decisions made by our 21-strong multi-asset team, headed by our lead multi-asset strategist Ewout van Schaick.