Threadneedle has launched a fund targeting equity-like returns with less volatility for head of multi-asset allocation Toby Nangle.
The Threadneedle Dynamic Real Return fund aims to return 4 per cent above the UK consumer prices index over a three to five-year investment horizon, which the asset manager says is in line with the long-run real return of equities.
The long-only, unleveraged fund, which takes a ‘go anywhere’ approach to invest across equities, fixed income, commodities, property, cash and alternatives, will also target volatility of up to only two-thirds that of equities over the cycle.
Nangle says: “This strategy aims to blend the best ideas from around the world to deliver equity-like returns for investors, but with controlled volatility. By taking a dynamic approach to asset allocation, and with the flexibility to invest in broad range of asset classes including commodities, property and cash, we expect to enhance risk-adjusted returns.
“As the future of the global economy remains uncertain, and unconventional measures are being used to manage liquidity, active multi-asset products can offer investors a more effective way to balance risk and return than traditional equity/bond funds.”
According to the fund’s strategy profile, the portfolio can have a maximum weighting of 100 per cent in fixed income and cash, while it can hold up to 75 per cent in equities, 20 per cent in property, 20 per cent in commodities and 10 per cent in alternatives.
Holdings can be direct investments, derivatives, exchange traded funds and in-house Threadneedle funds.
Nangle will be supported by head of managed funds Alex Lyle and the firm’s asset allocation strategy group. The group comprises chief investment officer Mark Burgess, head of equities Leigh Harrison, head of fixed income Jim Cielinski, head of global equities William Davies and head of currency Matt Cobon, as well as Nangle and Lyle.
Threadneedle head of EMEA sales Gary Collins says: “Threadneedle has a strong asset allocation heritage, with around 40 per cent of assets under management under some form of asset allocation mandate.
“This expertise is part of the blueprint behind our successful investment philosophy – looking across asset classes and using the knowledge of our whole investment team to gain a perspective advantage.”