ExclusiveUS fund manager Allspring sees rising demand for ‘liquid alternatives’ after bond, equity slump last year

US asset manager has noticed an uptick in demand for liquid alternatives and multi-asset strategies as it eyes a larger client base in Asia

The classic 60:40 portfolio allocation strategy needs to be improved, providing room for a multi-asset approach, Allspring’s Eddie Cheng says

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A man talks on a mobile phone while watching indicator boards at the Australian Stock Exchange in Sydney. Rising interest rates and inflation took a toll on equity markets globally last year. Photo: Reuters

Published: 4:00pm, 9 Apr 2023

Multi-asset strategies are in demand to minimise risks brought on by the simultaneous declines in bonds and stocks last year, according to Allspring Global Investments, which is expanding in Asia to tap wealthy investors and institutions.

Last year’s rare scenario when both equities and bonds fell has spurred the need for altering the traditional 60:40 asset allocation, with Allspring witnessing a rising appetite for alternative assets among its clients, said Eddie Cheng, the head of international multi-asset portfolio management at the company, which has US$463 billion of assets under management. The 60:40 asset allocation is a classic portfolio in which 60 per cent is invested in equities and 40 per cent in fixed-income.

“We do need to think how we can actually diversify away a bit from just equity and bonds,” he said, adding that investors could opt for “liquid alternative” strategies.

The rising interest in multi-asset strategies underscored investors’ need for hedging against risks after a historic year when global stocks and bonds both fell sharply, adding to the liquidity woes from traditional alternative assets such as private equity and real estate, as investors found it hard to exit amid a sluggish market.