Multi asset funds continue to be the bright spot in fund management with an 8 percent increase in AUM over the last six months and double the number of such managers winning net new mandates than losing them. Among equity managers, concentrated funds have shown some underperformance as correlation has fallen and quants have seen a gain in asset share, as per a recent report on Fund Management Strategy by Nomura.

Multi asset funds chart

Multi Asset Funds Have Seen An 8% Increase

Nomura’s sample of 530 multi asset funds has seen an 8 percent increase in AUM year to date, most of which has been from capital inflows.

Asset Allocation Changes Chart

As per Nomura, the group has made significant asset allocation changes over the last six months, having reduced the cash holdings and increased the weight in equities. The average fund weight in equities has risen from 45 percent in December to 47 percent at the end of May. Meanwhile, the allocation to cash has decreased from 9.8 percent to 7 percent. The allocation to government and corporate bonds has remained relative stable over the period. However, assessing the active overweight/underweight position on asset classes in aggregate is hard as the funds in the sample have a variety of risk appetites and target asset allocations. As an alternative to this, Nomura also asked the managers in the group about where they were over- and underweight. The results are very clear-cut with the largest overweight already being equities and the largest underweights being in government bonds and cash.

Performance by average holdings chart

They note that funds with a longer average holding period tend to outperform. However, this year so far, the most successful funds have been those with an average holding period of less than a year and less than a quarter. While funds with very short or very long horizons have underperformed.