With market volatility increasing amid the convergence of multiple global events, institutional investors can turn to multi-asset credit to provide attractive levels of income and diversification as well as reposition their existing asset mix or risk budget, said Blair Reid, partner and senior portfolio manager for multi-asset at BlueBay Asset Management, part of RBC Global Asset Management, during a session at the Canadian Investment Review‘s 2022 Risk Management Conference.

“We have inflation, the economic aftereffects of COVID and Putin’s war all happening at once. . . . The great thing about multi-asset credit is you can pivot and there are two aspects. Firstly, we can dial the risk up and down and hopefully get out of the way when markets react negatively. Secondly, there are a lot of asset classes to choose from and the best risk-adjusted returns are always moving around the market.”

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Multi-asset credit can help institutional investors weather the current volatility, he noted. “It’s not a panacea, though there are about 40,000 bonds we can choose from and often we select just a couple of hundred in a portfolio. It means, even in difficult times, we can seek out attractive risk-adjusted opportunities and rotate across the credit market.”

Reid said portfolio simplification is one reason institutional investors seek out multi-asset credit. “Investors with multiple static, single asset class portfolios can benefit from multi-asset credit. Combining multiple individual portfolios into a single multi-asset credit portfolio reduces governance time and adds to the ability to actively asset allocate.”

He also noted bonds are playing a key role in funding the transition to greener energy and multi-asset credit can help investors access opportunities that aren’t already in their existing portfolio.

Read more coverage of the 2022 Risk Management Conference.