News category: Multi-Asset Strategies

Portfolio managers at Asia EQD in Singapore discussed opportunities across commodities, such as rare and precious metals and different regional carbon markets. Brandon Yeo, deputy portfolio manager at Teal Rock Asset Management in Singapore, said Teal Rock has seen growth in the carbon markets, especially the European carbon allowances market which he said has expanded over the last half a decade.

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Institutional investors in the Asia Pacific are increasingly allocating to assets outside of traditional equities and fixed income in the current market environment. Attendees at Asia EQD at the InterContinental in Singapore heard how investors are looking to risk premia strategies, such as foreign exchange and volatility carry, and derivatives trades, such as collar and beta replacement strategies, to protect absolute returns in a multi-asset portfolio. 

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Investors in the Asia Pacific are utilizing U.S. equity futures contracts for liquidity, hedging and overlaying strategies.

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A market where macroeconomic conditions remain resilient and rates are declining would be supportive for equities, or so says M&G Investments’ Chief Investment Officer Fabiana Fedeli. Fedeli said there are pockets of equities that can generate much higher returns compared to fixed income markets, such as infrastructure and renewables, even as fixed income markets outperformed broader equity markets over the summer.

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Portfolio managers at Singapore’s USD28 billion UOB Asset Management are shifting to a more neutral holding pattern until they see more clarity about the direction of the U.S. and the global economy.

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On a 14-hour flight home to London, reflecting upon this year’s Asia EQD, a couple of things stand out: investor enthusiasm for options strategies and appetite for riskier assets.

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USD361 billion Janus Henderson is ramping up protection strategies in its diversified alternatives fund across commodities, trend following, volatility and multi-asset risk premia strategies, as the geopolitical and macro landscapes continue to present a challenging outlook. Part of this development saw the firm implement a new commodity trading advisor strategy last week, with plans to launch the strategy in a UCITS framework early next year. 

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The “cash is trash” talk is back as institutional investors’ cash holdings fell to their lowest level since the beginning of August. Markets have swung sharply this year. AI buzz gave way to doubts over AI spending. Rising unemployment rates in the U.S. sparked recession fears, spurring markets to expect rate cuts as deep as in past recessions. Shifting markets may tempt some investors to sit on the sidelines (or flee to less risky investments) as they await further clarity, but the message from Wall Street is clear: not staying invested during uncertainty could risk losing out on bullish trades.

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Guillaume Flamarion, managing director, co-head of the multi-asset group and head of equity derivatives structuring at Citi in New York, said the bank is seeing more interest in hedging and dispersion strategies after a volatile summer period during which many investors had a carry-focused profile. He said with geopolitical and election stress building in the U.S., investors are trying to effectively position their portfolios, leading to dispersion entry points coming into greater focus. 

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Credit default swap overlay strategies can be integrated into a 60/40 portfolio to actively manage its return-to-risk profile and generate alpha.

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