Multi-Asset

What is a Multi-Asset Fund?

As the name suggests, a multi-asset fund combines multiple asset classes in a single portfolio. These funds may invest in a number of traditional equity and fixed income strategies, index-tracking funds, financial derivatives as well as alternative investments, such as real estate investment trusts (REITs) and commodities.

This diversity allows portfolio managers to tactically shift risk exposures on behalf of investors - taking advantage of short-term opportunities or managing short-term risks - particularly in volatile markets.

Types of Multi-Asset Funds

At Franklin Templeton, we offer several types of multi-asset funds, seeking to meet a wide variety of typical investor goals:

Income Funds

These funds can be a useful addition to portfolios where an investor seeks to receive a distribution or payout from the fund on a regular basis. Distribution payouts can be based purely on dividends, purely on bonds, or a mix of different asset classes. They may be designed to be regular and consistent (which may occasionally require a return of capital), or regular, but inconsistent (paying out only what the investment earns.)

Target Risk Funds

These funds are generally focused on seeking to achieve growth and/or income within a specific volatility range.  The managers use multiple asset classes to help balance the risk and return of the fund consistent with the level of risk tolerable by the investor.  For example, an investor who has a low tolerance for investment risk may choose a “conservative” fund, whereas an investor who can tolerate more risk might choose “moderate”, “aggressive” or “growth” target risk funds.

Target Date Funds

These funds are typically associated with education planning or retirement planning.  An investor chooses a date sometime in the future when the funds will be needed for a specific purpose. The funds follow a “glide path” of exposure to growth-based assets, reducing the exposure to equity risk as the date nears.

Fund of Funds

A “fund of funds” is a mutual fund that typically invests in 10-20 mutual funds or ETFs from different asset classes instead of investing directly in stocks or bonds. These funds offer similar multi-asset benefits to a model portfolio, but within a single mutual fund structure.  Ongoing allocations are managed by a portfolio construction expert and administered directly within the mutual fund structure.

Model Portfolios

Model portfolios often comprise a suite of roughly 10-20 mutual funds from different asset classes in recommended proportions. The models are designed towards specific investment outcomes such as “income”, “tax-advantaged”, “stability and growth”, or “conservative growth”, among other combinations. Portfolio construction experts assemble the model and monitor it over time, making adjustments to the model as markets change.

Absolute Return Funds

These funds are a class of multi-asset fund that use a cash+ return target, rather than a benchmark, to measure growth. This means that regardless of what markets are doing, the fund adjusts its asset allocation to seek to achieve that target.

Our extensive multi-asset investment capabilities include:

Active asset management provides potential for outperformance and risk diversification relative to the broad market. For decades, investors have turned to us for our specialized investment expertise and extensive infrastructural support, when they seek to maximize and diversify their investments.

Commitment to Active ManagementDecades of Specialized ExpertiseGlobal Integrated Platform
Our belief in the value of active management has consistently guided our investment decisions and differentiates us from passive investors. Our seasoned teams, each providing differentiated style and perspective, build portfolios based on proprietary methodologies. The around-the-clock support of our global investment platform allows our investment teams to focus on research and portfolio management.

IS A MULTI-ASSET FUND RIGHT FOR YOU?

Investors generally seek growth, but most investors are constrained – in part - by a threshold of risk that they are willing to accept. A multi-asset fund can often bridge the gap by managing to a risk tolerance level, seeking to achieve only the growth that can be attained within that range.
By using multiple asset classes, these funds are characterized by:

  • A strategic asset allocation that is focused on achieving, in the long-term, either a risk target, a return target, or an income target
  • A depth and breadth of diversification beyond what a typical investor can achieve on their own, including sectors, geographies, market capitalizations, currencies, and management styles. Such funds may often include alternative investments such as real estate or commodities
  • Responsiveness to changing markets. Portfolio managers can reduce equity exposure during market volatility or increase equity exposure during “quiet” times, steering the portfolio in pursuit of the desired outcome
  • Exposure to “best thinking”. No portfolio manager can be an expert in all asset classes. Multi-asset portfolio managers compare the relative value opportunity of one asset class against another, but leave the security selection to the experts within that asset class or category.

The bottom line is that before investing, it’s important to understand the risks involved with the funds you're considering and determine if they fit your comfort level. It is also important to know if your investment choices are in line with your investment objectives and time horizon.

FEATURED FRANKLIN TEMPLETON MULTI-ASSET FUNDS