The ABCDs of multi asset strategies

A multi asset strategy offers a one-stop portfolio of different asset classes. Discover its merits.

All-weather

A multi asset strategy aims to deliver stable returns across all market conditions, even when the market falls.

Broad-based

A multi asset strategy is diversified across a range of asset classes which can include cash, bonds, stocks, commodities and real estate; as well as across markets and styles.

Convenient

By combining different asset classes across multiple regions in one portfolio, multi asset strategies potentially offer investors a quick and simple way to gain exposure to a diverse mix of investments globally.

Dynamic

To improve returns, the fund manager can adjust exposures to different asset classes depending on economic cycles.

For example, an active multi asset manager will typically put more money in cash and bonds if he feels that the economy is going to slow down, and more into stocks when the economy is booming.

The ABCDs of multi asset strategies

A multi asset strategy offers a one-stop portfolio of different asset classes. Discover its merits.

All-weather

A multi asset strategy aims to deliver stable returns across all market conditions, even when the market falls.

Broad-based

A multi asset strategy is diversified across a range of asset classes which can include cash, bonds, stocks, commodities and real estate; as well as across markets and styles.

Convenient

Dynamic

To improve returns, the fund manager can adjust exposures to different asset classes depending on economic cycles.

For example, an active multi asset manager will typically put more money in cash and bonds if he feels that the economy is going to slow down, and more into stocks when the economy is booming.

Discover dividends via equities

Equities are perhaps the largest investment asset class from an investor's perspective. When you invest in equities, you get income from dividends (and capital gains if you sell your equities at a profit). Dividends are an important source of returns and can help make your portfolio more defensive. Learn more about their attractive features, in particular Asian dividends.

Dividends make up a big part of equity returns in Asia

In the last 10 years, dividends make up a whopping 46% of total returns in Asia, much more than in the US¹. Don't miss out.

Dividends have been steadier than earnings in Asia

Dividends offer an important source of stability, especially during times when markets are uncertain.

Asian dividends offer diversification

Although utility and telecoms sectors typically pay out high dividends, you can get dividends from many other sectors in Asia like financials, information technology, materials, industrials, etc.

Asian dividends have been growing

From 2001, Asian dividends per share grew 304%². This is due to stronger cashflows, healthier balance sheets and lower debt levels.

Room for even more

While dividends are not guaranteed, Asian companies can pay out more dividends. They are only paying out 34% of their earnings in dividends, below the 44% average of developed markets³.

Demand for diversified income from retirees will keep demand for dividend stocks high. By 2050, over 40% of the population from Korea, Taiwan, Hong Kong and Singapore will be 60 years and above⁴.

Form lasting bonds with bonds

Bonds, like equities, are another important investment asset class. Bonds are basically an IOU between you (the lender) and corporations or governments (the borrower). Bonds are also known as fixed income. The interest you earn is paid in regular intervals. This interest is called coupon because in the old days, bonds were issued as bearer certificates and had detachable coupons printed on them for each scheduled interest payment. Find out if bonds fit your investment profile.

How bonds suit your investment needs

If you prefer to receive steady and regular payouts, bonds offer a predictable income stream at fixed intervals. Moreover, if held to maturity, bondholders get back the entire principal assuming the bond issuer does not default due to financial difficulties.

Types of bonds you can invest in

You can choose to buy a government or corporate bond depending on your risk appetite. If you are risk averse, government bonds are regarded as a less risky option, but you may have to contend with lower returns versus a corporate bond with similar features.

Bonds are also rated according to their creditworthiness. The rating assigned to a bond will help you to choose between the financially stronger issuers from the weaker ones.

Decide your investment time frame

It is important to fix a time frame for any new investment as your needs will vary with time. As a bond typically comes with a maturity period, it can match your future lump sum cash outlay requirement if it coincides with the bond’s maturity date.

A complementary role in your investment portfolio

Bonds can bring significant diversification benefits to your investment portfolio. The steady income from bonds can mitigate the volatility of equity price movements.

Moreover, bond prices may not move in the same direction or of the same magnitude as equity prices.

Factors affecting the price of bonds

Bonds have a reputation for being safe investments, but are by no means risk-free. The most keenly watched factor that affects bond price is interest rate. Bond prices move in the opposite direction to interest rates.

If you choose to hold your bonds to maturity, you will be less affected by the daily price movements caused by changes in interest rates.

Real Estate Investment Trusts (REITs)

If you are keen on real estate, you needn’t just own physical property. You can also buy the shares of a Real Estate Investment Trust (REIT). A REIT is a company that owns and manages income-generating real estate assets. REITs offer five key advantages:

Affordability

Unlike buying physical properties, REITs can be purchased with small initial outlays. They offer a more affordable investment proposition.

Diversification

You can diversify your risk exposure by different geographic locations and property types from apartments and offices, to shopping centers, hotels, hospitals and warehouses.

Low correlation

REITs tend to have low correlation to equities, largely due to their more predictable income stream which in turn reduces their share price volatility.

Income generation

As REITs are required by law to distribute at least 90% of taxable income to shareholders each year, you can be assured of receiving a regular dividend income, although the amount may vary each year.

Liquidity

The ability to easily buy and sell units in REITs makes them a liquid proxy to physical real estate.

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The information contained in this website is provided for reference only and does not constitute any investment advice. Investors are advised to seek independent advice before making any investment decision. Past performance is not indicative of future performance. Investment involves risk and investors may not get back the amount originally invested. The fund may use derivative instruments. In adverse market situations, the fund’s use of derivatives may become ineffective and the fund may suffer significant losses. These and other risks are described in the offering documents. Please read the offering documents , including the risk factors, carefully. US/HK dollar-based investors are exposed to currency fluctuations in the US/HK dollar exchange rate where the fund is denominated in currencies other than US/HK dollar. The website has not been reviewed by the Securities and Futures Commission (“SFC”). Issued by Eastspring Investments (Hong Kong) Limited.

Eastspring Investments (Hong Kong) Limited is an ultimately wholly owned subsidiary of Prudential plc of the United Kingdom. Eastspring Investments (Hong Kong) Limited and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America or with the Prudential Assurance Company, a subsidiary of M&G plc, a company incorporated in the United Kingdom.