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What Is Multi Asset Investing?

Written by, Marija Petkova

Updated September, 6, 2022

Multi-asset investing is a great way to spread risk and protect yourself from market volatility.

But, what is multi asset investing, how does it work, and what are its pros and cons?

Let’s dive in.

What is Multi-Asset Investing?

Multi-asset investing is the practice of allocating money across a variety of different asset types, including stocks, bonds, real estate, commodities, to achieve diversification and reduce risk. 

One of the key benefits of this type of investing is that you’ll be better positioned to weather any market volatility and achieve your long-term financial goals.

What’s more, since a multi-asset portfolio invests in different asset classes, it can potentially earn a higher overall return, compared to what an investor would make by investing in just one asset. Brits’ most common investment choices are stocks, tech companies, pensions, investment bonds and also investing in property.

If you’re thinking about investing or starting to use investment apps in the UK, you might want to work with a financial advisor that can help you determine the right mix of assets to reach your financial goals. These platforms can be useful to make investing more convenient.

If you don’t have the funds to start investing in assets, you might want to look into fractional shares.

What Is a Multi-Asset Class?

Classes are the types of assets that you can invest in. The main asset classes are bonds, stocks, and cash. Each asset class has different characteristics and provides different benefits. 

For example, stocks tend to be more volatile than bonds, but they also offer the potential for higher returns. Cash is the least volatile asset class, but it offers little returns.

How Does Multi-Asset Investing Work?

There are a few different ways to execute a multi-asset strategy. 

One common approach is to invest in individual assets across different classes (such as stocks, bonds, and commodities). You can also take a more “fundamental” approach and invest in funds that track certain indexes or benchmarks.

 Some investors choose to invest directly in each asset class, while others use mutual funds or exchange-traded funds that offer exposure to multiple asset classes.

Still, there are many multi-asset strategies that investors can use to capitalise on their investments

Every investor is different, and each will have a different optimal portfolio mix. The key is to find the right approach for you and stick with it over time. 

It’s important to remember that multi-asset class investing “set and forget” strategy. You’ll need to regularly rebalance your portfolio to ensure that your asset allocation stays in line with your goals and risk tolerance.

Pros and Cons of Multi-Asset Investing

To figure out whether multi-asset investing is the right option for you, you should carefully consider its pros and cons.

PROS
Diversification: The easiest way to achieve diversification in your portfolio is to invest in a variety of assets.
Protects against heavy losses: By spreading your investment across different asset classes you can benefit from the gains at lower levels of market volatility.
Lower Fees: When you invest in a variety of assets, you typically pay lower fees than if you invest in just one asset class. This is because you’re spreading your investment costs across a larger number of assets.
Greater Flexibility: With this type of investing, you can increase your exposure to a particular asset class, without having to sell your other investments.
CONS
Higher fees: Multi-asset funds have higher management fees because they’re mostly managed by a professional rather than a stock index.
May miss some opportunities: This type of investment is less likely to provide higher returns since it investing is more than one asset class.
Less Transparency: Multi-asset class investments can be less transparent than investing because their performance is more difficult to track.

If investing in assets doesn’t sound like something you would want to do, you can try investing in money market funds.

Bottom Line

What is multi-asset investing? Put simply, it means spreading your investments across a range of different assets to minimise losses caused by market volatility. It’s a type of investing that is flexible, generally safe, and is the best way to a diverse portfolio. 

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.