As investors approach and enter retirement, schemes may seek solutions to help grow capital in a low-risk manner and to protect their investment from significant drawdowns. In this context, an appropriate level of diversification is a key consideration, not only to help bolster returns but also to spread risk and protect against capital loss.

Such an approach may also assist schemes that are looking to de-risk their growth assets or seeking a strategy that generates steady, sustainable returns.

Key strengths of the Newton Multi-Asset Diversified Return Fund

  • Flexibility to harness diversified sources of return across asset classes and the capital structure
  • Focus on capital preservation and minimising drawdown
  • Transparent, research-driven investment process

A combination of diversification and flexibility Our Multi-Asset Diversified Return Fund aims to preserve capital and provide long-term total returns from a diversified, flexible portfolio, including equities, bonds and a range of alternative investments.

  • Controlling risk through diversification at both asset class and security level
  • A wide opportunity set to try to deliver strong risk-adjusted returns

Fundamental, active and flexible approach to selecting assets and securities The Fund invests in a diverse range of global assets without sector or country constraints. We have the flexibility to increase or decrease the allocation to equities, bonds and alternatives depending on our view of their prospective risk and return characteristics. However, to ensure an appropriate, broad level of diversification within the portfolio, the maximum weight for any asset class is limited to 50%.

Evolving the asset allocation mix - chart

Source: Newton, 31 March 2016, using data going back to April 2003.
Compared to more established economies, the value of investments in emerging markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic or political instability.

The objective of the Fund is to achieve long-term capital growth in excess of cash (1-month GBP LIBOR) +3% p.a. over five years before fees, from a balanced portfolio, diversified across a range of assets. A positive return is not guaranteed and a capital loss may occur.

Inception date: 27 November 2006

Assets – four key areas:

  • Directly held equities
  • Directly held bonds
  • Alternatives such as infrastructure, private equity, convertibles, commodities, renewables and hedge funds
  • Derivatives for capital preservation

Controlling risk through diversification at both asset class and security level

While diversification is an important means of managing volatility and generating returns, true diversification means not having too much of an investor’s wealth exposed to a single risk factor. We diligently monitor inter-linkages between different risks as part of the portfolio management process, to prevent over-exposure to any particular risk. We also consider whether there is a reason to be invested in a particular area at all; diversification is not about having an allocation to every asset class.

The Fund uses derivatives to protect against tail-risk events when diversification breaks down.


Newton defined contribution investments

www.newtonim.co.uk/dc

* May be subject to change

You should read the Prospectus and the Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found at www.bnymellonim.com.