Multi-asset strategies are the top investment choice recommended by financial advisers, research from Aegon has revealed.

Its analysis showed that 25 per cent of all client assets were held in multi-asset funds.

By comparison, 20 per cent of assets were held in discretionary funds managers (DFM) portfolios, 20 per cent were in fully in-house model portfolios, and 18 per cent in externally built model portfolios.

Around 12 per cent of client assets were in single strategy funds, 1 per cent were held in individual stocks, and 4 per cent in ‘other’.

Of those advisers using multi-asset funds, 63 per cent said they recommended them due to the diversification that they offer, Aegon noted.

Nearly half (45 per cent) were likely to recommend them based on the ability to select risk-rated funds, while 35 per cent said it was due to the access they provide to asset allocation expertise, and 30 per cent recommended multi-asset strategies because they were easy for clients to understand.

However, although the findings showed that multi-asset funds were the most popular, the investment structure chosen by an adviser depended on circumstances and needs.

More than half (53 per cent) of advisers considered multi-asset funds to be the least expensive approach.

Therefore, multi-asset funds were the most recommended structure for clients with less than £100,000, with 60 per cent of advisers favouring this option.

In contrast, 80 per cent of advisers considered DFMs as the most expensive investment approach, and were the most recommended structure for clients with more than £500,000 in savings, with 37 per cent of advisers endorsing this option.

Furthermore, advisers were found to be increasingly turning to external solutions when managing their clients’ assets.

Almost two-thirds (63 per cent) of advised assets made use of such solutions, including multi-asset funds, DFMs or model portfolios built using external expertise.

“There’s no doubt that elevated market volatility has made the past three years an incredibly challenging and unpredictable period for investment advice,” said Aegon managing director, investment propostion, Lorna Blyth.

“But, as we start to see a gradual return to normality, it’s encouraging to know that the majority of advisers are aligned and feeling confident in the strategies employed by their clients’ investments.

“In particular, our research shows advisers favour multi-asset funds as their primary investment structure, with 25 per cent of all client assets under management in such funds. This is likely due to their considerable versatility and diversity, and the ability to select options that align to different risk appetites.

“Multi-asset funds also offer ease-of-use for advisers and customers, with the permission to make asset allocation changes over time on the customer’s behalf built into the fund design.

“In addition, they support advisers in meeting their regulatory obligations – such as MIFID II, PRIIPs and new Consumer Duty rules – with target markets’ pre-defined and robust investment governance processes built in.”

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