Multi-Asset Investing Trends in the UK and Europe

Multi-asset investing is at a crossroads, and the road ahead looks nothing like the one behind it. Investors in the United Kingdom and Europe are changing how they allocate capital, select strategies, and evaluate value. Fees are falling, and regulations are tightening. Though the pace and direction of these changes aren’t uniform across the region. 

UK investors are leading the charge toward lower-cost solutions and bolder equity allocations, while their European counterparts remain tangled in higher fees and legacy distribution models. Many multi-asset funds are failing to keep pace with their benchmarks, and cautious strategies are losing their appeal.  

The full Multi-Asset Trends in UK and Europe report details fund performance, cost compression, and fund flow shifts. Download the report for insights on index strategies, managed portfolio pressure, and regulatory influences.  

Multi-asset strategies are designed to diversify risk across asset classes and deliver smoother, risk-adjusted returns. Yet, many have fallen short of expectations. Many multi-asset funds have underperformed their Morningstar Category indexes in the United Kingdom and continental Europe over the past decade. 

The average fund in the GBP allocation 40–60% equity category trailed its benchmark by nearly 1.5 percentage points annually through the end of 2024. The picture is even bleaker in Europe, where EUR moderate allocation global funds underperformed their benchmarks by nearly 2.4 percentage points annually.  

This underperformance stems from a combination of fee drag, asset allocation missteps, and market-timing errors. A decade of US equity market dominance only amplified the difficulty for globally allocated portfolios to keep up. 

Managed portfolio services have also emerged as a cost-effective alternative, eating into the market share of traditional multi-asset funds.  

Fund fees are declining across the board, but UK fund managers are moving faster than their European counterparts. In the United Kingdom, regulatory reforms like the ban on commission payments and new requirements under the Financial Conduct Authority’s Assessment of Value have accelerated cost compression.  

The median fee for new share classes in the UK’s GBP allocation 40-60% equity category fell from 129 basis points in 2010 to 67 basis points in 2024. Each year, closing share classes usually were significantly costlier than newly launched classes. 

In Europe, the decline has been less steep; the median fees for EUR moderate allocation global funds in 2024 carried a representative cost, excluding transaction fees, of 140 basis points compared with 170 basis points in 2010. High fees persist in major markets such as Germany (1.67%) and France (1.53%), though Dutch investors, benefiting from clean share classes, face much lower costs at just 0.63%. 

Investor preferences are shifting toward higher-risk allocations. In the United Kingdom, flexible-allocation strategies—portfolios with largely unconstrained mandates to invest globally across asset types—have seen steep outflows. These funds typically rotate positions across stocks, bonds, commodities, cash, and their related derivatives, but their broad remit has recently fallen out of favor. Only the more adventurous 60–80% equity and 80%-plus equity categories have attracted net inflows over the past three years. The flexible-allocation segment, once dominant, has shrunk from 25% to 15% of GBP allocation fund assets. 

Across the Channel, Europe presents a similar but more nuanced story. EUR cautious allocation global funds have experienced significant redemptions, driven partly by rising bond yields and increased competition from money-market and fixed-income funds. 

However, the EUR aggressive allocation global category has seen inflows, reflecting a broader appetite for growth-oriented strategies amid a strong equity market performance. 

The UK has embraced index-based allocation portfolios, with offerings such as Vanguard’s LifeStrategy series amassing over GBP 46 billion in assets. Competing low-cost ranges from providers like Abrdn, BlackRock, HSBC, and LGIM have also scaled rapidly. 

Often packaged as exchange-traded funds, these strategies appeal to cost-conscious investors and advisors. 

However, their adoption in Europe has been modest. Structural hurdles have limited uptake, including the lack of tax advantages for ETFs and bank-driven distribution networks. Advisors in Europe are still incentivized to sell higher-fee products, further slowing the shift toward lower-cost options. 

Recent fund flows underscore the divergence in regional sentiment. In the United Kingdom, flexible-allocation funds saw sharp redemptions in 2024, with strategies such as Baillie Gifford Diversified Growth experiencing net outflows exceeding GBP 1.3 billion. Defined-benefit pension schemes—buoyed by higher bond yields—have also begun to derisk, transferring assets out of flexible multi-asset products. 

Meanwhile, Europe’s USD moderate allocation category has stood out, largely thanks to income-focused funds like Allianz Income and Growth and Franklin Income, each attracting more than EUR 2 billion in 2024. This trend has propelled the category to nearly 45% of total assets within Europe’s USD allocation fund landscape. 

UK reforms have compressed fees and reshaped advisor incentives and investor expectations. Managed portfolio services have surged in popularity, offering transparent pricing and streamlined access to model portfolios. 

In Europe, however, legacy distribution models, dominated by banks and commission-based sales still present friction. Until structural changes reduce embedded costs and improve transparency, the continent may continue to lag behind the UK in delivering value-driven, multi-asset solutions. 

• Scrutinize fees. Cost remains a key differentiator in fund performance. Advisors should benchmark fund fees rigorously and review lower-cost index-based options with clients. 

• Assess the value of active management. With many actively managed funds struggling to justify their fees, advisors must determine whether their clients are getting sufficient value for money. 

• Explore managed portfolio services. These can provide tailored solutions at competitive costs, though advisors must weigh their own fiduciary responsibilities and due diligence requirements. 

• Adapt to changing investor sentiment. As cautious strategies fall out of favor, advisors should revisit portfolio allocations to align with clients’ risk appetites.

The multi-asset category is far from obsolete, but it is evolving. For fund providers, staying competitive will require sharper pricing, more flexible product design, and stronger performance net of fees. For advisors, the challenge lies in navigating a more complex, divided market where traditional approaches no longer guarantee results. 

Understanding the nuances of regional trends, cost dynamics, and investor behavior is now essential to delivering value. Whether through lower-cost index funds, actively managed strategies with demonstrable alpha, or managed portfolios tailored to client objectives, the future of multi-asset investing will reward those who adapt.