86% of institutional investors to increase allocations to MAC strategies

Written by Natalie Tuck

17/10/2023

Eighty-six per cent of institutional investors and wealth managers will increase their allocations to multi-asset credit (MAC) strategies over the next two years in pursuit of a reliable and diversified source of income, according to Aeon Investments.

The research of 101 senior investment managers of pension funds, insurance asset managers, family offices and wealth managers who collectively manage around US$545bn, found that 62% will slightly increase allocations to MAC strategies, while 24% will make dramatic increases between now and 2025.

Nearly all (96%) respondents agreed that MAC strategies diversify portfolios away from traditional fixed-income asset classes, such as corporate and government bonds.

In terms of the key benefits that MAC strategies offer, 43% of respondents said optimal investment outcome through the economic cycle is the most important.

Thirty-seven per cent picked superior risk-adjusted returns from MAC versus standalone credit strategies as the most important benefit. Twelve per cent said active management and tactical rotation across diversified credit assets is the most important benefit, while 6% said it is that MAC strategies are better positioned to capitalise on relative value, short-term mispricing and dislocations.

When asked their preference for MAC investing, 43% of investors chose a single manager offering a well-diversified MAC strategy. Thirty-two per cent preferred a multi manager through third party fund of funds; 21% said bespoke mandate (or segregated account) based on own risk and return requirements is the most appropriate; and just 5% employ specialist managers for each strategy.

Commenting, Aeon Investments head of portfolio management, Khalid Khan, said: “Multi-asset credit strategies offer a multitude of benefits for investors. In addition to providing important portfolio diversification, they also give the opportunity for superior returns irrespective of the market environment.

“The level of innovation in the MAC sector is increasing dramatically, with more strategies available to professional investors. This is leading to an increase in allocations.”

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