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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Leader in systematic equities across market cap weighted indices, smart beta and active quantitative strategies

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Multi-Asset Solutions

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Strategy Overview

Key Facts

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We invest for purpose

Markets are constantly moving – and when conditions change investors must rethink their asset allocation.

Our flexible and dynamic approach draws on a global opportunity set to meet the multiple, often competing objectives of our clients. The goal is to tie all investment decisions to the ultimate objective of the portfolio.

Time has shown that asset allocation decisions are the dominant driver of overall portfolio returns and multi-asset investing provides risk and return benefits that are not typically achievable by investing in a single asset class. 

Flexible

Asset allocation can be a rigid process, but for objectives-based investors like us, flexibility allows us to respond to changing market conditions and steer our portfolios towards objectives.

Dynamic

Most investors have goals across several time horizons and rather than rely on theoretical long-term assumptions, we aim to take advantage of shorter-term investment opportunities by dynamically shifting exposures.

Disciplined

Blending qualitative insights with the discipline of quantitative underpinnings, our evidence-based approach has operated for more than 23 years.

Why invest in the First Sentier Real Return Fund

 

We believe that holding a large number of asset categories doesn’t provide real diversification in today’s markets. To solve this challenge we have developed the First Sentier Real Return Fund, an objective-based approach to investing that combines the benefits of long-term asset allocation with dynamic short-term tilts to enhance returns and abate risks.

  • The fund aims to protect against inflation and provide growth by achieving a positive return of 4.5% in excess of Australian CPI (trimmed mean) over rolling five year periods. 

  • Unlike traditional multi-asset portfolios, there is no requirement to allocate to any particular investment type. We only invest in opportunities that offer the best risk-reward for investors, blending a combination of assets together across the full spectrum of equities, bonds, currencies and commodities that have the highest likelihood of delivering on the performance target while also considering sequencing risks.

  • By dynamically shifting exposures, we aim to take advantage of short-term investment opportunities as they arise. History has shown that being dynamic, making well-timed changes to the investment mix, can have significant positive influence on long-term performance.

Our asset allocation moves with markets

The foundation of our portfolios, our neutral asset allocation, takes a long term view on economies, markets and expected returns across asset classes. While neutral asset allocation alone will be the dominant driver of returns, there is also opportunity to mitigate portfolio risks and generate additional returns as market conditions change. We supplement our long term neutral asset allocation with dynamic asset allocation, which exploits shorter-term market inefficiencies. 

How our portfolio works

Neutral asset allocation

The ‘neutral’ asset allocation is the mix of investments that we believe has the highest likelihood of achieving a given portfolio’s long-term objectives based on fundamentals. The first step in our investment process is determining the economic outlook, both globally and for individual countries.

Using current valuations as a starting point, key economic variables including GDP growth, inflation, risk free rates, and long-term bond yields enable us to calculate expected returns for various asset classes. 

Case study

Asset allocation when the future ain't what it used to be

Over the past 40 years, strategic asset allocation has successfully relied on diversification alone to deliver strong long-term returns. With the diversification benefits historically delivered by equities and bonds weakening in today’s markets, and expected returns across all asset classes falling lower, portfolios need to adapt to deliver on their objectives.

Do not expect the same dynamics going forward

Equities valuations have only been higher twice before in the last 100 years, in 2000 and 1929. Based on these valuations, history indicates that expected returns over the next 5 to 10 years will be much lower.

Source: Robert Shiller, Yale University, data to 30 June 2020. Price-Earnings Ratio (lhs) is the US equity valuations are based on the cyclically adjust price earnings ratio, or CAPE (Shiller PE). Long-Term Interest Rates (rhs) is the 10 year US treasury yields, or equivalent long term rate. 

The market expects returns to fall across all major asset classes over the next 5 years

Source: Bloomberg and First Sentier Investors proprietary models. These are expected returns based on internal assumptions as at 30 June 2020. They are predictive in nature and therefore not guaranteed to occur. Known or unknown risks and uncertainties and inaccurate assumptions may result in them differing materially from results ultimately achieved.

Responsible Investment

Our corporate RI strategy is based upon three strategic pillars of quality, stewardship and engagement.

As global multi-asset investors, we partner with our clients to provide solutions that maximise the probability that they will achieve their investment objectives. We assess our client needs based on three key criteria: risk tolerance, investment horizon and return ambition level. We utilise third party monitoring services for our direct holdings.

Learn more about the Multi-Asset Solutions team's approach to Responsible Investment

Meet the Multi-Asset Solutions team

Epco van der Lende

Co-Head of Multi-Asset Solutions

Kej Somaia

Co-Head of Multi-Asset Solutions

Jan Baars

Senior Portfolio Manager

Andrew Harman

Senior Portfolio Manager

Want to know more?

Contact your Key Account Manager