Exclusive | US fund manager Allspring sees rising demand for ‘liquid alternatives’ after bond, equity slump last year
- US asset manager has noticed an uptick in demand for liquid alternatives and multi-asset strategies as it eyes a larger client base in Asia
- The classic 60:40 portfolio allocation strategy needs to be improved, providing room for a multi-asset approach, Allspring’s Eddie Cheng says
Last year’s rare scenario when both equities and bonds fell has spurred the need for altering the traditional 60:40 asset allocation, with Allspring witnessing a rising appetite for alternative assets among its clients, said Eddie Cheng, the head of international multi-asset portfolio management at the company, which has US$463 billion of assets under management. The 60:40 asset allocation is a classic portfolio in which 60 per cent is invested in equities and 40 per cent in fixed-income.
“We do need to think how we can actually diversify away a bit from just equity and bonds,” he said, adding that investors could opt for “liquid alternative” strategies.
The rising interest in multi-asset strategies underscored investors’ need for hedging against risks after a historic year when global stocks and bonds both fell sharply, adding to the liquidity woes from traditional alternative assets such as private equity and real estate, as investors found it hard to exit amid a sluggish market.
The MSCI All-World Index fell close to 20 per cent last year, while 10-year Treasury yields, a benchmark for the bond market and which moves inversely with bond prices, spiked to 3.88 per cent in 2022 from 1.52 per cent in 2021.
Allspring suggests allocating more to liquid alternatives, strategies or assets which provide quick liquidity while behaving very differently from traditional asset classes.
