Hi, I'm Andreas Zingg. I'm joined by my colleague Mohneet Dhir today in the studio. We are going to talk about multi-asset investing. First of all, what is multi-asset strategy? So a multi-asset strategy is essentially allocating capital to different asset classes, usually part of a longer term investment strategy. Now, traditionally, multi-asset portfolios have been made up of equities and bonds, largely driven by the fact that bonds tend to be good diversifiers, ballast in a portfolio to equity volatility that you often see in multi-asset portfolios through different market cycles. It's also worth noting that a lot of these multi-asset portfolios and multi-asset strategies are actually offered in different risk profiles and often the ratio of equities and bonds is changing within each one of the offerings, which changes the risk profile.

Thank you, Mohneet. There is another video where we talk about the benefits of strategic asset allocation. We talk then about the special relationship of stocks and bonds. So if advisors want to invest in a multi-asset strategy, what options do they have? Yeah, so essentially advisors have two options. The first one is DIY, build it yourself. The second one is an all-in-one-solution.

If we just focus on the first one for a second, the DIY solution. So if an advisor chose to do it themselves, they would basically go out and buy different building blocks through the same provider or different providers and they'll have to basically do the management of the portfolio itself as well, which involves rebalancing and other various different aspects of sort of day-to-day management of a portfolio, if they were doing it themselves.

It's also worth noting that often the costs tend to add up because you are obviously buying different blocks from different providers. But then also it's so time consuming for an advisor to be sitting there and spending their time managing this portfolio. The second option that advisors have is an all-in-one solution, which providers such as Vanguard can provide, for example.

So that will be a portfolio which is made for you put together for you using expert portfolio construction skills. Some of the research expertise that providers such as Vanguard can provide. And essentially it's a core sort of starting building block for many, many advisors when they approach client portfolios. So an all-in-one solution, for example, would be a multi-asset fund, a multi-asset ETF or a model portfolio.

Yeah. So what is the rationale for an advisor to go with such an all-in-one solution versus what you call do it yourself? Yeah. So when advisors go for an all-in-one solution through a provider such as Vanguard, what they can benefit from is essentially three sort of key things. The first one is the expert skills you get, which involves portfolio construction, it involves research, economic insights, economic research, which can drive the asset allocation or the strategic asset allocation, as you mentioned earlier, within those multi-asset portfolios. So people who understand the markets can obviously try and avoid biases or general sort of tilts that you're often exposed to using different building blocks. They can apply the expert skills and make sure that you get maximum diversification within the multi-asset product that you're buying.

The second one is ongoing management, which is done by the portfolio managers at providers such as Vanguard. That includes regular rebalancing and other aspects of, related to asset allocation and some of the building blocks as well on a more regular basis. So the portfolio managers make sure that the product is delivering and doing what it's supposed to do.

And then the third one is obviously discipline, which is quite key. The reason I mention that is because when advisors outsource portfolio management, if you will, and buy an all-in-one solution rather than a DIY solution, what they're also doing is outsourcing that decision making. And by doing that, they're not exposing themselves to what normal behaviour, human behaviour tends to be during volatile and uncertain markets, which is tinkering your portfolio or making changes. When it's outsourced you are much more likely to be more disciplined.

So ultimately, advisors save money and time. So why can an asset manager like Vanguard offer all-in-one solutions at a lower price? Yeah, so that's, it's a great question. So providers such as Vanguard, often a lot of processes and the way that we run some of our funds and ETFs it's done on a more scalable basis so all the processes that are behind it, the people that are behind it, as the product grows, we can actually afford to put costs down.

And remember, lower costs essentially means that investors get more of their returns. Additionally, also when we use our internal building blocks, as Vanguard often does with some of the funds and ETFs that we have, it does allow us to lower costs even more, which is great. You also mentioned advisors save time. So portfolio construction and asset management seems to me quite important elements kind of of a client process, so if advisors outsource that, what else should they do with their time? Yeah, I know, it's... I think people often think that picking investments is a big part of an adviser's job, which it is, but it's not their entire job and the value that they provide to clients. If you look at all the sort of the breadth of stuff that advisors actually cover when they're in this process with their clients, it's so much more than just picking investments.

It's, you know, the overall wholesome financial management aspect of it. And by outsourcing and choosing an all-in-one solution, what advisors can do is use the time to spend on some of those other aspects of financial management and the support that they can provide their clients - essentially more time back with their clients. And these elements cannot be done by the asset manager, that needs to be done by the advisor who is close to the end investor and knows the end investor well.

So what I would add, probably the only two elements is choice and preference. So I think investors and also advisors have different preferences, some want active, some want index based. So I think it's also important for an asset manager to offer this choice so that advisors and clients can actually pick. It's probably not just the risk, the different risk profile, it's also the wrapper, model portfolios funds or ETFs, for example, or as I just mentioned, index based strategies, active or even blended strategies.

So we hope this video was informative for you and helps you to add value for your clients. With that, I thank you for watching.