No need for compromise

LAST Update 8 SEPTEMBER 2020

The volatility of global markets has illustrated how ‘all-in-one’ investment vehicles can be beneficial for investors. We look at ATST, which can offer diversification without compromising growth…

The highly unpredictable situation caused by coronavirus has illustrated just how difficult being an active stock picker can be for the everyday investor. We have seen huge discrepancies in the returns of markets across the globe, and a small number of companies driving the returns within some of the best-known indices. 

In the US, for example, over 2020 (to mid-August) the S&P 500 has risen by more than 4%, more than any other major market in the world. However, one fifth of the companies in the index have lost more than 50% from their all-time highs according to research group Cornerstone Macro. In fact, the average stock in the index is 28.4% below its peak, with just three sectors (dominated by technology and consumer discretionary) averaging returns greater than the total S&P 500 index. By way of comparison the FTSE 100 is down almost 21% over the same period, with oil and banking stocks being some of the strongest hit. All the while, the FTSE AIM market is up 0.1%, with sectors including retail, gold, pharma and technology leading the way.

This unpredictability and volatility we have seen across countries and sub sectors, demonstrates how ‘all-in-one’ investment vehicles can benefit investors. These funds, done properly, take the job of portfolio construction away from the investor and give it to professional management teams with access to the skills, resources and knowledge of some of the best investment houses in the world, and offer diversification that is absent from a single-strategy fund.