Baring Multi Asset Income Fund

The Fund is designed to deliver a sustainable income by employing a dynamic and transparent multi-asset approach. Using simple building blocks, the Fund is designed to exploit global income opportunities while aiming to mitigate downside risk.

Summary fund objective

To generate an annual income of 2.5% above the income generated from a global equity market average (as measured by the MSCI All Countries World Index) together with the potential for capital growth over the medium to long term. In addition the Trust will seek to manage risk with a target of half the volatility of global equities over rolling three year periods. There is no guarantee that these targets will be met. For full details of the investment objective, please see the prospectus.

Key features of the Fund

• Multiple sources of income from a range of asset classes, geographies and sectors
• Investment process is based on transparent and simple building blocks
• Indicative yield of 5%1 while targeting half the volatility of an equity income fund through the cycle
• Monthly income payments2
• Focus on capital preservation by a team with significant experience in both income and multi asset investment

Manager comments

This commentary relates to the month of October 2017- to be read in conjunction with the factsheet.

In Europe we saw an escalation in the situation in Catalonia.  Whilst this led to some short term, localised, volatility in the Spanish bond market, the underlying strength of the Spanish and European economy continues, which is supported by recent Purchasing Managers Index (PMI) data.
In Japan, Prime Minister Shinzo Abe won a snap general election as he looked to increase his party’s majority. As this represents continuity, no major changes are expected to the current economic policy mix. Whilst the Yen did weaken over the month, this was predominantly due to a rise of US bond yields, rather than any snap election impact. Japanese equities continued to power ahead. 

Elsewhere in Asia, China held its 19th Party Congress of the Communist Party. The central discussion was to address growth, as its current state is seen as ‘imbalanced’ and affecting areas such as the labour market, education and welfare. The aim is to pursue higher quality growth through a three stage program (2020, 2035 and 2050). The first stage will focus on reducing poverty, protecting the environment and preventing major financial risks. 

There have been no significant changes to the high level positions within the portfolio and the fund remains well positioned to benefit from the positive global economic environment.  We continue to be positive on European and Japanese equities and emerging market debt. Over the month we gently increased our exposure to emerging market debt, to take advantage of some weakness in market pricing.

We remain very light on core developed government bond exposure as we are concerned that yields could rise from here, hurting returns.  We continue to use alternative sources of diversification in the portfolio, including precious metals.  

We maintain our long held positive view on global economic growth. We also believe that the current disinflationary trend could change and are conscious that inflation could begin to pick up. Despite all of positivity surrounding the Party Congress, China remains a challenging place to analyse.   We continue to watch it, and connected global markets, with a healthy degree of scepticism.