If you’re looking to build a diversified portfolio of risk-averse investments – you may want to do so with a multi asset fund. In doing so, your chosen fund might contain a blend of stocks, bonds, cash, and even commodities like gold.
In this guide, we review some of the Popular Multi Asset Funds UK for 2021 and show you how to invest from the comfort of your home.
Popular Multi Asset Funds UK
Here’s a breakdown of the popular multi asset funds UK available in the market today. We review each multi asset fund in great detail further down.
- iShares Core Growth Allocation ETF
- iShares Core Conservative Allocation ETF
- Invesco Variable Rate Preferred ETF
- Vanguard Balanced Index Fund Admiral Shares
- BlackRock Dynamic Diversified Growth Fund
Popular Multi Asset Funds Reviewed
By investing in a multi asset fund, you are able to approach the financial markets in a diversified manner. That is to say, rather than putting all of your eggs into a collection of stocks, your portfolio might also contain bonds, REITs, and gold.
Before investing, you need to research core metrics surrounding the investment fund – such as past performance, perceived risk, and fees.
To give you a bit of inspiration, below we have reviewed 10 multi-asset funds.
One of the popular multi asset funds UK is the iShares Core Growth Allocation ETF. Although this multi asset fund contains just seven holdings – each instrument represents an individual ETF. In turn, your investment will consist of a highly diversified range of stocks and bonds.
For example, there is a 32% weighting on the iShares Core S&P 500 ETF. This will get you access to 500 large-cap companies listed in the US. This includes everything from Tesla, Facebook, and IBM to Microsoft, Apple, and Amazon. You will also have a 30% stake in the iShares Core Total USD Bond Market.
This consists of high-grade bonds that generate regular income via coupon payments. We also like the fact that this multi asset fund gets you access to the emerging markets. In particular, you will have a 7% holding in the iShares Core MSCI Emerging Markets ETF
In terms of the financial returns, the iShares Core Growth Allocation ETF has performed very well since its inception in 2008 – generating growth of more than 171%. This translates to average annualized gains of 8.57%. Notably, this multi asset fund comes with an annual expense ratio of just 0.31%. This means that you will pay just 3.10 per year for every £1,000 invested.
Your capital is at risk
If you have a lower tolerance for risk and volatility – then you might want to analyse the iShares Core Conservative Allocation ETF. As the name suggests, this multi-asset fund will take a conservative approach to the financial markets – ensuring that your capital is allocated into less risky markets.
This iShares multi asset fund will also invest in a diversified basket of stocks and bonds. In fact, many of the individual ETFs in this fund are similar to the iShares Core Growth Allocation, albeit, the weighting system is much more geared towards fixed-income bonds. For example, the allocation towards the iShares Core Total USD Bond Market ETF goes from 30% up to 56%.
Additionally, your holding in the S&P 500 is reduced from 32% down to 17%. This ensures that your returns are somewhat more predictable – as much of your income will be derived from fixed-rate bond instruments. Naturally, past performance on this multi asset fund has been conservative – but attractive nonetheless.
For example, since its inception in 2008, the iShares Core Conservative Allocation ETF has generated average annualized returns of 5.91% per year. This translates into total returns of 101%. The expense ratio on this multi asset fund is even more competitive at just 0.25% annually.
3. Invesco Variable Rate Preferred ETF
The Invesco Variable Rate Preferred ETF is a multi asset fund that will be popular with those that seek regular income in the form of bonds. Although this multi asset fund also holds a collection of hybrid securities that track traditional equities – much of the portfolio consists of bonds issued by US corporations.
For example, there are high-grade bonds issued by the likes of JPMorgan Chase, General Electric, Wells Fargo, BP, Bank of America, GMAC Capital, and more. Breaking this multi asset fund down further, the portfolio is heavily investing in the financial and banking sectors – with a 76% weighting.
With that said, you will also be gaining exposure to other sectors – such as energy, utilities, industrials, and consumer staples. This is also one of the popular asset funds for dividends – as the provider makes a monthly income distribution and so is a popular fund to invest for a monthly income. This allows you to reinvest your dividends and thus – benefit from long-term compound growth.
Since this multi asset fund was incepted, it has generated average annualized returns of 5.41%. Based on a 5-year period, the fund has grown by 7.06% per year. Finally, when it comes to fees, the Invesco Variable Rate Preferred ETF charges an expense ratio of 0.50% per year.
If you’re looking to create a super-diversified portfolio at the click of a button – the Vanguard Balanced Index Fund Admiral Shares is worth looking into. This Vanguard fund takes a systematic 60/40 split. That is to say, 60% of the assets held in its portfolio will track the broader US stock markets while 40% will be held in fixed-income bonds.
Regarding the former, this contains more than 3,400 individual stocks. Not only does this include the likes of Apple, Johnson & Johnson, Visa, JPMorgan Chase, and 9/10 Apple Inc. Microsoft Corp. Amazon.com Inc. Alphabet Inc. Facebook Inc. Tesla Inc. JPMorgan Chase & Co. Berkshire Hathaway – but plenty of low-cap stocks from the Russell 2000.
When it comes to fixed-income securities, this popular multi asset fund consists of more than 8,600 individual bonds. These are primary high-grade bonds that possess little risk – with the current yield averaging 1.4%. Although many of the asset classes in this fund are considered high-grade, financial returns have outperformed many traditional markets since inception.
In fact, had you invested in this multi asset fund back in 2000 – you would be looking at average annualized gains of 6.99%. In comparison, the Balanced Composite Index – which is the benchmark used by the multi asset fund to gauge performance, returned annual gains of 7.12% in the same period.
This means that the fund has managed to track the benchmark virtually like-for-like for more than two decades. When it comes to fees, the Vanguard Balanced Index Fund Admiral Shares is one of the cheapest in this space. At just 0.07% per year, this means that you will pay just 70p per year for every £1,000 invested.
5. BlackRock Dynamic Diversified Growth Fund
The BlackRock Dynamic Diversified Growth Fund aims to outperform the Bank of England base interest rate by at least 3.5% annually – across a medium period of three years. In order to achieve this goal, this multi asset fund will invest at least 80% of its funds into fixed-income bonds, as well as short-term debt securities.
There is also holdings in traditional stocks and index funds, as well as physical gold. In total, you will be gaining exposure to more than 1,800 individual assets. Breaking the portfolio down further, some of the largest holdings in this multi asset fund include the Scottish Mortgage Investment Trust, Foresight Solar Fund, Emerging Markets Equity Fund, and the iShares Physical Gold ETF.
In terms of asset allocation, 38% is equally held in stocks and fixed-income bonds. You then have 18% held in cash and cash equivalents, and just under 5% in alternative investments. We should, however, note that this multi asset fund is somewhat pricey at 1.35% per year.
This is largely because of the types of markets that you will be gaining access to – especially when it comes to foreign-issued bonds and alternative assets. Looking at the fund’s past performance, BlackRock has generated average annualized returns of 4.33% over the past five years. This means that it has hit its target of outpacing the Bank of England base rate by 3.5%.
Other Multi Asset Funds UK
Here is a list of another 10 popular multi asset funds available to invest in the UK.
- RPAR Risk Parity ETF
- Pacer Trendpilot 100 ETF
- Amplify BlackSwan Growth & Treasury Core ETF
- iShares GSCI Commodity Dynamic Roll Strategy ETF
- FormulaFolios Hedged Growth ETF
- EquityCompass Risk Manager ETF
- Arrow Dow Jones Global Yield ETF
- FormulaFolios Smart Growth ETF
- 6 Meridian Hedged Equity-Index Option Strategy ETF
- Cambria Global Asset Allocation ETF
You can evaluate whether or not the above multi asset funds are right for you by visiting the provider’s website.
What are Multi Asset Funds?
Put simply, multi asset funds allow you to invest in a diversified portfolio of financial instruments. Originally, when you invest in a classic ETF or mutual fund – the provider will focus on a specific market. For example, the fund might look to target FTSE 100 stocks or shares that yield high dividend payments.
On the other hand, the popular multi asset funds will invest in a wide variety of markets. For example, the previously discussed Vanguard Balanced Index Fund Admiral Shares ETF invests in everything from stocks and bonds to gold and cash equivalents. This ensures that your money is being invested in a risk-averse manner.
How do the Popular Multi Asset Funds UK Work?
In the terms of the fundamentals, the popular multi asset funds UK work much the same as an ETF. That is to say, the multi asset fund will be managed by a large-scale provider – such as iShares, BlackRock, Vanguard, or Invesco. Once you invest in your chosen multi asset fund – the provider will determine which investments to make.
This allows you to invest a lump sum and not need to worry about researching the financial markets. Instead, the fund manager takes care of everything on behalf of its investors. When it comes to financial returns, the popular multi asset funds UK target two key areas of growth – which we elaborate on below.
The NAV (Net Asset Value) evaluates the current market value of the multi asset fund. This is based on the assets held by the fund at the current market price – less outstanding liabilities.
- The multi asset fund has £400 million worth of UK equities
- It also has £200 million in US-issued bonds and £50 million in gold
- As such, the multi asset fund has a NAV of £650 million
This figure will rise and fall at the end of each trading day and is then reflected in the stock price of the multi asset fund. After all, the popular multi asset funds are represented via ETFs – which are listed and traded on public stock exchanges.
The key point here is that should the NAV be worth more than the price at which you originally invested – you will increase the value of your investment.
- In the above example, we said that the NAV of the multi asset fund is £650 million
- We’ll say that you invested a lump sum of £3,000
- 12 months later, the NAV has increased by 10% to £715 million
- If you were to sell your investment now – your £3,000 would be worth £3,330 (10% gains)
To clarify, unlike dividends, you actually need to sell your multi asset fund investment before you can realize any gains made via an increased NAV. This is much the same as making gains from a traditional stock investment.
In the vast majority of cases, popular multi asset funds UK will hold a relatively sizable allocation of fixed-income assets. This is often a combination of government and corporate-issued bonds – alongside short-term debt securities.
Either way, by holding a stake in a multi asset fund that holds fixed-income instruments – you will be entitled to your share of dividend payments.
Once again, this works the same way as a conventional ETF or investment trust, as the size of your payment will be determined by how much capital you have invested in the fund.
- You invest £3,000 into a multi asset fund that holds 50% of its portfolio in dividend-paying stocks
- At the end of the first quarter – the fund pays an annualized dividend yield of 6%
- As you are receiving a quarterly payment, you will receive a 1.5%
- On a £3,000 investment, this means that your dividend payment will amount to £45
We found that in many cases, the popular multi asset funds UK will make a dividend distribution every month. Otherwise, it will be every three months.
Why Invest in Multi Asset Funds?
With thousands of potential investments at your fingertips – you might be wondering whether or not multi asset funds are right for your financial goals and attitude to risk.
If you’re still sitting on the fence, below we discuss some of the reasons why the popular multi asset funds UK represent an attractive investment vehicle.
One of the main features of investing in popular multi asset funds UK is that you will have access to a ready-made, fully diversified portfolio. After all, the clue is in the name- ‘multi asset’ fund. Now, there are hundreds of mixed investment funds in the market – some more diversified than others.
But, irrespective of which option you go with – it is all-but-certain that you will have exposure to fixed-income and growth assets. For example, your chosen multi asset fund might invest 40% of its capital in blue-chip stocks, 40% in US Treasury bonds, and the rest in cash.
Either way, this allows you to approach the investment scene in a more risk-averse manner, as you won’t be putting all of your eggs into one basket. In other words, while the stock-segment of your portfolio might suffer from a market downturn, this might be countered by an increase in bond yields – and visa-versa.
Passive multi asset funds ensure that you do not need to put any of the legwork in when it comes to research and analysis. This is a minimum requirement when buying traditional stocks and bonds on a DIY basis.
That is to say, if you choose to open a self-directed investment account – you are 100% responsible for choosing which assets to purchase and sell – and when.
This is in stark contrast to how passive multi asset funds work – as your chosen provider will determine which investment strategy to take. This ensures that once you make an investment – users can sit back and allow your capital to work for you.
Ability to Outperform the Market
When you invest in a traditional stock index fund – your profit potential is 100% linked to the respective market.
- For example, if you invest in an ETF that tracks the FTSE 100, and the index finishes the year 6% in the green, you will make the same.
- Similarly, if you invest in an ETF that tracks the Dow Jones, and the index ends up 4% down for the year, you will also lose 4%.
The key point here is that your investment returns are all linked to the underlying market that the ETF is tracking. But, when you invest in the popular multi asset funds UK – the provider in question has much more flexibility.
This means that it doesn’t need to focus on a specific market or benchmark when deciding which assets to purchase. Instead, it can attempt to outperform the wider market by making flexible investment decisions.
Low Cost and Small Minimums
You might be surprised to learn that the popular multi asset funds UK charge extremely low fees. Known as the ‘expense ratio’, the fee is expressed as a percentage which is then multiplied against the amount of capital you have invested.
In all but a few cases, you shouldn’t expect to pay more than 0.3% when investing in a multi asset fund. In fact, Vanguard charges just 0.07% per year on its Balanced Index Fund Admiral Shares ETF, while the iShares Core Conservative Allocation ETF costs just 0.25% annually.
In addition to low fees, popular multi asset funds UK are popular with those that wish to invest small amounts.
Popular Multi Asset Funds Brokers
If you’re ready to start investing in the popular multi asset funds UK – you will need to find a suitable brokerage site. In the sections below, we have reviewed two popular stock brokerages that allow users to invest in Multi Asset funds.
eToro is an online broker and trading site that has a huge client base in excess of 26 million users. The platform offers a wide range of assets and financial markets – covering 2,400+ stocks and 250+ ETFs from 17 global exchanges. Other supported markets include digital currencies, commodities, indices, and forex.
This popular broker also gives you access to some popular multi asset funds – including many of the investments we have discussed on this page. Irrespective of which multi asset fund you elect to opt for – the minimum investment is just $10. Furthemore, eToro is a 100% commission-free broker.
67% of retail investors lose money trading CFDs at this site
This means that you won’t pay a fee to enter or exit the market. If your chosen multi asset fund is listed on the London Stock Exchange, you will also avoid paying any stamp duty tax (0.5%). In addition to multi asset funds, another passive investment that eToro offers is its Copy Trading tool. This allows you to copy an experience eToro investor that has a verifiable track record. There are also diversified CopyPortfolios, which are managed by the team of in-house traders at eToro.
In terms of getting started, opening an account at eToro shouldn’t take you more than 10 minutes. This is inclusive of registering, uploading a copy of your ID, depositing money, and completing your multi asset fund investment. Users can choose from a UK debit/credit card or bank wire, as well as e-wallets like Paypal and Skrill. Finally, and perhaps most importantly – your capital at eToro is protected by the FSCS scheme and the broker is authorized and regulated by the FCA.
|Stock Broker||Minimum Deposit||Fractional Shares?||Pricing System||Cost of Buying Stocks & ETFs||Fees & Charges|
|eToro||$10||Yes – $10 minimum||0% commission on ALL real stocks, spreads for CFDs||Market spread is not included when buying real stocks||No Deposit fees, $5 withdrawal fee, $10 inactivity fee, no account management fees.|
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Capital.com is an online CFD trading site that offers an alternative approach to the popular multi asset funds. This is because you will be trading funds via CFD instruments – meaning that you do not own the underlying asset. Instead, your goal is to speculate on whether you think the multi asset fund will rise or fall in value.
In other words, the platform allows you to go long or short on your chosen market. In addition to being able to profit from both rising and falling prices, Capital.com also offers leverage. When trading a fund, you’ll get leverage of up to 1:5 – meaning you have the option to trade with five times the amount you have in your account. Irrespective of which CFD fund you decide to trade, Capital.com won’t charge you any commissions on entering and exit the market.
You will also find that spreads are usually very competitive – especially during busy market hours. On top of multi asset funds, Capital.com also allows you to trade stock CFDs, commodities, indices, and forex. The minimum deposit at this popular platform is just £20 – which you may fund with a debit/credit card or e-wallet. There is also a demo account facility, should you wish to practice trade first. Capital.com is authorized and regulated by the FCA.
79.17% of retail investor accounts lose money when trading CFDs with this provider.
How to Invest in Multi Asset Funds
Once you have decided which broker you wish to use, you then need to go through the account opening process. If this is your first time investing in a multi asset fund online – follow the step-by-step walkthrough below.
Step 1: Open A Trading Account
Head over to the homepage of your chosen broker and begin the account set-up process. You will be required to fill in your personal details – including your full name, email address and mobile number. Create a username and password for the platform to continue.
Step 2: Verifiy Your Account
Most reputable brokers in the UK are regulated by the FCA – which is why users may be required to verify their accounts. To do this, simply upload proof of ID (a copy of your driver’s license or passport) and proof of address (a copy of a bank statement or utility bill). Once these documents have been uploaded, your broker should verify them in a couple of minutes.
Step 3: Deposit funds
The next step is to deposit funds into your trading account. Most brokers may support 1 or more of the following payment methods:
- Credit card
- Debit card
- Bank transfer
Choose your preferred payment option and deposit the funds into your account.
Step 4: Invest in Multi Asset Funds
Once your account has been funded, proceed to search for any multi asset funds wish to purchase on your platform’s search bar. Fill in the amount you want to credit into the trade, and confirm your transaction.
In conclusion, multi asset funds could potentially be an alternative to conventional ETFs – which are simply tasked with tracking a market. After all, your chosen fund manager might decide to invest in a combination of stocks, bonds, index funds, real estate, and even gold.
If you’re ready to invest in a multi asset fund, you should do so with a reputable stock broker that can cater to your investing needs.