Mike Turner, head of strategy and asset allocation at Aberdeen Asset Management said the diversification that takes place in multi asset allocation enables investors to benefit from uncertain markets.
"When the environment remains so uncertain there is potential for asset allocation. The positives are that there is much more asset allocation and wider diversification, such as commodities, equities and bonds," he said.
"In terms of opportunities in this area there is increasing encroachment in the balanced managed area where there is more opportunity for diversified growth. It gives investors the potential to sleep better at night over traditional balance which is dominated by equities."
Multi Asset investing appears to be a growing trend in the investment world. Data from Financial Express showed there are 25 IMA UT and OEIC defined multi asset funds. Fund performances over a one year period to 30 June 2010 varied from 6.81 per cent to 23.33 per cent. The top five best performances can be seen in the table below.
Source: Financial Express Analytics
In addition M&G recently confirmed it is considering launching a multi asset income fund, although no formal plans have been made to the FSA as of yet. While Rathbones made its multi asset portfolio available to retail investors in May of this year. The portfolio consists of the Rathbone Total Return Portfolio and the Rathbone Strategic Growth Portfolio, both of which aim to produce targeted absolute returns within defined levels of volatility.
David Coombs, investment director at Rathbones and manager of both funds said the increased amount of regulatory concerns in the market is resulting in IFAS looking beyond the traditional asset classes.
"There are so many regulatory issues – RDR and whole of market for example - IFAs need to look beyond traditional asset classes and look at all asset classes instead. The FSA has pushed IFAs into looking at different risk models," said Coombs.
"Not all IFAs have the resources to do this though and are therefore looking to outsource. A benefit of multi asset investing is that IFAs can outsource the risk of getting asset allocation wrong.
Looking ahead Coombs said he believes demand for multi asset investing will continue in the short term.
"The old balanced investing method is way too volatile. People want lower levels of volatility. There is a fashion element to these funds, similar to that of absolute return funds. However, I cannot see anything that will dampen demand in the short term."
Ben Yearsley, investment manager at Hargreaves Lansdown says multi asset investing is an interesting area, but does not think the volatility in the market will make them more popular.
"The area includes lots of different uncorrelated asset classes and I don't think volatility in the market will have an impact on this."
Thames River's Gary Potter said he was cynical of the term 'multi asset' and said he does not think there is a new story in this area.
"I do not think the term multi asset means that people should so much different to what they have always done. I think it is a bit of a marketing gimmick, I do not disagree with some of the strategies but do think that marketing has got a little ahead of itself," he said.
"We are currently in an adjustment phase, liquidity is becoming the dominant factor in the market and I do not think some of these products offer the protection investors think they do."