They've Got the Whole World in Their Hands
A growing number of new funds are pursuing global, multiasset strategies.
On the heels of 2008's market crisis, an increasing number of new funds are touting flexibility. Many invest anywhere around the globe--across multiple regions, asset classes, and currencies. Others position themselves as "tactical" asset-allocation funds with the flexibility to change their allocations quite dramatically. Still others do both, investing globally and tactically. Many of these newbies land in Morningstar's world-allocation and multialternatives categories. In those two categories, 86 funds have launched since late 2008, attracting roughly $30.5 billion in assets.
The idea of giving a manager the broadest possible opportunity set to start with is compelling. Moving tactically to pounce on opportunities or to jump out of the way of risks sweetens the deal. The allure of global, tactical approaches has been burnished to a high gleam by stories such as the rosier growth prospects of developing markets or investors' desire to avoid the soul-crushing losses of another 2008.
Dig the New Breed
One glimpse at the expanding set of globe-trotters reveals a wide, wide range of strategies. Some resemble their older-school world-allocation brethren, avoiding radical shifts in asset allocation and providing exposure to a fairly stable mix of stocks, bonds, and cash. At the other end of the spectrum are offerings in the multialternatives category that get a big part of their market exposure through the use of derivatives, shift their asset allocation quickly (and often), and periodically load up in particular areas of the market. Most will fall somewhere in between. So, what's an investor to do?
Michael Herbst does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.