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Diversify & build passive income with a multi-asset strategy

15 January 2020
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Diversification has often been taken for granted by investors, but there is more to diversification than simply combining bonds and stocks. A multi–asset portfolio offers exposure to a broad number of asset classes and may invest in a number of traditional equity and fixed income strategies, index–tracking funds, financial derivatives as well as alternative investments. This flexibility and diversity allow portfolio managers to potentially balance risk with reward to deliver steady, long–term returns for investors.1

In the current environment with renewed bouts of market volatility and rising correlations between bonds and stocks, traditional balanced portfolios may be riskier than they appear.2 According to George Efstathopoulos, multi–asset portfolio manager at Fidelity International, multi–asset funds help to address gaps in traditional balanced funds by offering the ability to invest in new markets, especially as domestic markets fail to offer the returns clients desire.3

Here we have compiled a list of five multi–asset funds that is popular with both retail and institutional investors (ranked by Fund Size).

jan2020-diversify-chart01

Of the five funds, the one that stands out is of course the JPMorgan Global Income A fund which was first launched in June 2001 and has garnered an impressive US$31.2 billion in Asset Under Management (AUM). Its top three stock holdings are currently Coca–Cola (0.6%), Verizon Communications (0.6%) and Merck & Co (0.5%), and the portfolio has about 55.5% allocation in United States, 20.5% in Europe ex–UK and the rest allocated elsewhere globally.

You will also notice that many multi–asset funds pay dividends on a monthly frequency to suit the needs of retirees and the desire of the Asian investor to generate passive income. Annual dividend yields are also within a reasonable and sustainable range of 4.0% to 5.5% to avoid paying down from principal yet attractive enough to meet investors' thirst for income with some level of capital appreciation.

Just to put things in perspective for illustration purposes, if you managed to squirrel away and accumulate a portfolio of $1,000,000 that generates a 4.0% dividend yield, that works out to be about $40,000 a year or $3,333 a month!

Of course, if you don't have a million dollars today, you can also kick start a Regular Savings Plan (RSP) and invest monthly into a portfolio of multi–asset funds to slowly build your retirement nest egg.

To explore our full range of funds on dollarDEX, try our intuitive fund finder or get started on your no-fees investing journey now!



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Disclaimer

All information here is for GENERAL INFORMATION only and does not take into account the specific investment objectives, financial situation or needs of any specific person or groups of persons. Prospective investors are advised to read a fund prospectus carefully before applying for any shares/units in unit trusts. The value of the units and the income from them may fall as well as rise. Unit trusts are subject to investment risks, including the possible loss of the principal amount invested. Investors investing in funds denominated in non-local currencies should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Past performance is not indicative of future performance. dollarDEX is affiliated with Aviva but dollarDEX does not receive any preferential rates for Aviva products as a result of this relationship. Unit trusts are not bank deposits nor are they guaranteed or insured by dollarDEX. Some unit trusts may not be offered to citizens of certain countries such as United States. Information obtained from third party sources have not been verified and we do not represent or warrant its accuracy, correctness or completeness. We bear no responsibility or liability for any error, omission or inaccuracy or for any loss or damage suffered by you or a third party (including indirect, consequential or incidental damages) arising in any way from relying on this information.

This information does not constitute an offer or solicitation of an offer to buy or sell any shares/units.
This article has not been reviewed by the Monetary Authority of Singapore.

Information is correct as of 09/01/2020.



  • 1 https://www.franklintempleton.com.sg/investor/products/our-range/multi-asset#tab1

    2  https://www.blackrock.com/lu/intermediaries/education/multi-asset-funds?switchLocale=y&siteEntryPassthrough=true

    3  https://www.businesstimes.com.sg/magazines/wealth-december-2018/multi-asset-edge




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Disclaimer
All information here is for GENERAL INFORMATION only and does not take into account the specific investment objectives, financial situation or needs of any specific person or groups of persons. Prospective investors are advised to read a fund prospectus carefully or may wish to seek advice from a financial adviser before applying for any shares/units in unit trusts or making a decision to purchase an investment product. The value of the units and the income from them may fall as well as rise. Unit trusts are subject to investment risks, including the possible loss of the principal amount invested. Investors investing in funds denominated in non-local currencies should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Past performance is not indicative of future performance. dollarDEX is affiliated with Singlife but dollarDEX does not receive any preferential rates for Singlife products as a result of this relationship. Unit trusts are not bank deposits nor are they guaranteed or insured by dollarDEX. Some unit trusts may not be offered to citizens of certain countries such as the United States. Information obtained from third party sources have not been verified and we do not represent or warrant its accuracy, correctness or completeness. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons.

All prices and values shown on dollarDEX.com are indicative and is based on prices that is from 2-4 dealing days ago. Fund prices are provided by a third-party and clients should not rely on these prices for decision making. dollarDEX does not guarantee any prices or valuations shown, and accepts no responsibility for their accuracy.

This information does not constitute an offer or solicitation of an offer to buy or sell any shares/units.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

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