Premier Multi-Asset Low Risk Solutions: an overview

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  • 05 mins 24 secs
Ian Rees, Deputy Head of Multi-Asset Funds, Premier Asset Management, discusses the key objectives of the Premier Multi-Asset Absolute Return Fund and Premier Multi-Asset Conservative Growth Fund and the multi-asset team’s investment approach.


Premier Miton Investors

Tel: 0333 456 9033


MIKE HAMMOND: Hello my name is Mike Hammond, Sales Director at Premier Asset Management, and I’m joined today by Ian Rees, Deputy Head of the Premier Multi-Asset team. Hello Ian.

IAN REES: Hello.

MIKE HAMMOND: As part of the Premier Multi-Asset team, you’re managing two low risk investment solutions. It would be interesting if we could just focus on the Multi-Asset Absolute Return Fund in the first instance so could you just outline what the key objectives of that particular fund are?

IAN REES: The Premier Multi-Asset Absolute Return Fund has a target return objective of cash plus 2% over a rolling three years. It also has a relative volatility ceiling of 30% against the FTSE All share. Although since we’ve been managing the funds at the end of 2009 the fund has been operating with less than 5% volatility.

MIKE HAMMOND: OK so on that basis Ian, can you just talk us through what sector the fund is quoted in and also from an investment perspective what are the advantages of being in that sector?

IAN REES: The fund sits in a targeted absolute return sector and it is built as a multi-strategy, multi-manager fund where we’re looking for each of the component parts to deliver a positive absolute return. That in turn enables us to achieve our objectives. And given the flexibility that sector provides we have good confidence in doing that.

MIKE HAMMOND: So, given what you’ve just said, how do you construct the portfolio to achieve both the volatility and return objectives?

IAN REES: Well one of the key features we look at when building the portfolio is to try and ensure that no single investment or investment idea dominates the return of the fund. We think by having a broad spread of ideas and a good breadth of contribution of performance, we can deliver more consistent returns and importantly control the overall volatility of the fund.

MIKE HAMMOND: Ian, so based on what you’ve just said what type of clients do you think are suitable for this fund?

IAN REES: Well, the fund is designed, it’s an actively managed absolute return solution. It is useful for investors who are trying to take a cash plus return objective and are trying to seek that through a fund with low volatility characteristics. The additional advantage of this particular fund is that we are trying to generate returns through capital and not generate any income. So that obviously provides some tax planning benefits for either higher rate taxpayers or trusts.

MIKE HAMMOND: Thank you Ian, so moving on to the second fund within the low risk range, the Premier Multi-Asset Conservative Growth Fund, what do you see at the key differences between the two funds?

IAN REES: The objective of the Premier Multi-Asset Conservative Growth Fund is to deliver a target return of cash plus 3% over a rolling three years with a 33% volatility ceiling relative to the FTSE All Share. The fund itself sits within the mixed investment 20-60 sector. As a consequence of this, we need to maintain a minimum allocation of 30% in cash and bonds, which means the return being generated is a mixture of both capital and income return.

MIKE HAMMOND: OK. You’ve just highlighted there that you’ve got to hold a minimum of 30% in cash and bonds, and we’ve seen lots of press comment about the increase in risk within the bond market and we’ve seen some recent interest rate increases. So how do you actually manage this risk within this particular asset class?

IAN REES: Our prime concern is that with bonds at the current time we have quite high duration risk. This is their interest rate sensitivity dominates the return that they’re generating. We also feel that credit spreads do not give enough compensation for default risk either now or in the future. So the types of instruments we’re looking for, our alternative credit funds, floating rate notes or even absolute return bond funds, that help provide a much shorter duration and less credit sensitive risk to these types of assets we hold here.

MIKE HAMMOND: So, Ian, other than the bond exposure, obviously Multi-Asset Conservative Growth has a slightly higher risk budget. So how do you manage the portfolio and what are the key differences between the two funds?

IAN REES: Both funds are managed with the same philosophy and investment approach. We own a collection of assets covering both alternative type investments, specialist bonds as we’ve already alluded to and assets that we term conservative equities. Now these are a mixture of either structured investments, in preference shares or convertible bonds. Now the higher return objective of multi-asset conservative growth allows us to hold a bit more allocation to some of these low beater equity sectors, such as infrastructure or insurance or even healthcare, which offer much higher returns but greater sensitivity to equities generally.

MIKE HAMMOND: So finally, Ian, what type of client do you think this particular fund is suitable for?

IAN REES: Well, again, clients who want an actively managed solution but have a higher return and risk objective than those from the Multi-Asset Absolute Return Fund.

MIKE HAMMOND: Ian, thank you very much for your time today, much appreciated. If you would like further information on the funds that we have spoken about today, please contact us on the information below. Thank you.

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