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As the name suggests, a multi-asset fund combines multiple asset classes in a single portfolio. These funds may invest in a number of traditional equity and fixed income strategies, index-tracking funds, financial derivatives as well as alternative investments, such as real estate investment trusts (REITs) and commodities.
This diversity allows portfolio managers to tactically shift risk exposures on behalf of investors – taking advantage of short-term opportunities or managing short-term risks – particularly in volatile markets.
At Franklin Templeton, we offer several types of multi-asset funds, seeking to meet a wide variety of typical investor goals:
These funds can be a useful addition to portfolios where an investor seeks to receive a distribution or payout from the fund on a regular basis. Distribution payouts can be based purely on dividends, purely on bonds, or a mix of different asset classes. They may be designed to be regular and consistent (which may occasionally require a return of capital), or regular, but inconsistent (paying out only what the investment earns.)
These funds are generally focused on seeking to achieve growth and/or income within a specific volatility range. The managers use multiple asset classes to help balance the risk and return of the fund consistent with the level of risk tolerable by the investor. For example, an investor who has a low tolerance for investment risk may choose a conservative fund, whereas an investor who can tolerate more risk might choose moderate, aggressive or growth target risk funds.
These funds are typically associated with education planning or retirement planning. An investor chooses a date sometime in the future when the funds will be needed for a specific purpose. The funds follow a glide path of exposure to growth-based assets, reducing the exposure to equity risk as the date nears.
A fund of funds is a mutual fund that typically invests in 10-20 mutual funds or ETFs from different asset classes instead of investing directly in stocks or bonds. These funds offer similar multi-asset benefits to a model portfolio, but within a single mutual fund structure. Ongoing allocations are managed by a portfolio construction expert and administered directly within the mutual fund structure.
Model portfolios often comprise a suite of roughly 10-20 mutual funds from different asset classes in recommended proportions. The models are designed towards specific investment outcomes such as income, tax-advantaged, stability and growth, or conservative growth, among other combinations. Portfolio construction experts assemble the model and monitor it over time, making adjustments to the model as markets change.
These funds are a class of multi-asset fund that use a cash+ return target, rather than a benchmark, to measure growth. This means that regardless of what markets are doing, the fund adjusts its asset allocation to seek to achieve that target.
Active asset management provides potential for outperformance and risk diversification relative to the broad market. For decades, investors have turned to us for our specialized investment expertise and extensive infrastructural support, when they seek to maximize and diversify their investments.
Our belief in the value of active management has consistently guided our investment decisions and differentiates us from passive investors.
Our seasoned teams, each providing differentiated style and perspective, build portfolios based on proprietary methodologies.
The around-the-clock support of our global investment platform allows our investment teams to focus on research and portfolio management.
Investors generally seek growth, but most investors are constrained – in part – by a threshold of risk that they are willing to accept. A multi-asset fund can often bridge the gap by managing to a risk tolerance level, seeking to achieve only the growth that can be attained within that range.
By using multiple asset classes, these funds are characterized by:
A strategic asset allocation that is focused on achieving, in the long-term, either a risk target, a return target, or an income target
A depth and breadth of diversification beyond what a typical investor can achieve on their own, including sectors, geographies, market capitalizations, currencies, and management styles. Such funds may often include alternative investments such as real estate or commodities
Responsiveness to changing markets. Portfolio managers can reduce equity exposure during market volatility or increase equity exposure during quiet times, steering the portfolio in pursuit of the desired outcome
Exposure to best thinking. No portfolio manager can be an expert in all asset classes. Multi-asset portfolio managers compare the relative value opportunity of one asset class against another, but leave the security selection to the experts within that asset class or category.
The bottom line is that before investing, its important to understand the risks involved with the funds youre considering and determine if they fit your comfort level. It is also important to know if your investment choices are in line with your investment objectives and time horizon.
Seeks to maximize income, while maintaining prospects for capital appreciation, by investing in a diversified portfolio of stocks and bonds.
Seeks both income and capital appreciation by investing in a combination of stocks, convertible securities and fixed income securities.
Seeks the highest level of long-term total return consistent with its asset allocation. Total return consists of both capital appreciation and income with the portfolio gradually placing an increasing emphasis on income as the year 2030 approaches.
Share this page with your financial advisor to learn if Multi-Asset Funds are appropriate for your portfolio.
Opening an account at Franklin Templeton is easier than ever. We offer IRAs and other standard account types.
This website does not provide investment advice or investment recommendations. It is intended for educational and informational purposes only.
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices are affected by interest rate changes. Bond prices, and thus a bond funds share price, generally move in the opposite direction of interest rates. As the price of bonds in a fund adjusts to a rise in interest rates, the funds share price may decline. High-yield, lower-rated (junk) bonds generally have greater price swings and higher default risks. Foreign investing, especially in developing markets, has additional risks such as currency and market volatility and political or social instability. For tax-free income funds, the alternative minimum tax may apply. These and other risks pertaining to specific funds, such as those involving investments in specialized industry sectors or use of complex securities, are discussed in each funds prospectus.
, you will be taken to a more detailed fund information page which includes main investments and risks.
Your clients should carefully consider a funds investment goals, risks, charges and expenses before investing. Download a prospectus, which contains this and other information. Your clients should read theprospectuscarefully before they invest or send money.
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Quarterly commentary discussing fund performance.View more details