Multi-asset investing provides benefits typically not achievable by investing in a single asset class. In volatile markets it’s increasingly dangerous to rely on one driver of returns, despite history pointing to incidents where this rewarded investors handsomely.
There is a risk that the equity markets that have done well historically are just the last man standing.
Most financial analysis has taken the US as a starting point, because that is where the great majority of capital and universities are situated. The question becomes: is the US representative of the investible landscape today, and will it be going forward?Probably not.
US asset markets have been the best performer – both in nominal, real, and risk-adjusted returns – over the last hundred years. Using them as a base case means a heavy concentration of survivorship bias in your portfolio. To make our point, we turn back in time and look at Russia.
In this investment publication, our multi-asset team covers the basics before looking at what history can tell us about real returns, how correlations between asset classes can shift and volatility.
References to “we” or “us” are references to Colonial First State Global Asset Management (CFSGAM) a member of MUFG, a global financial group. CFSGAM includes a number of entities in different jurisdictions, operating in Australia as CFSGAM and as First State Investments (FSI) elsewhere. Past performance is not a reliable indicator of future performance. Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to such securities or the names of any company are merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies. Neither MUFG nor any of its subsidiaries are responsible for any statement or information contained in this document. Neither the MUFG Group nor any of its subsidiaries guarantee the performance of any securities or companies mentioned herein or the repayment of capital in relation to such securities or companies. Investments in such securities are not deposits or other liabilities of the MUFG Group or its subsidiaries, and such investments are subject to investment risk, including loss of income and capital invested.