Frequently asked questions
Why Insight for multi-asset investment?
Multi-asset investment has been a core part of Insight's business for many years: the Insight broad opportunities strategy has been running for over 13 years. Our track record demonstrates that our managers have the skills and the experience to benefit from the investment opportunities, but also to control the risks, involved in multi-asset investing.
We blend the active management of directional risk across a wide range of asset classes, with sources of return that rely less on market direction. This is based on two key principles, access to a braod opportunity set and dynamic asset allocation.
How do you allocate across different asset classes?
We allocate assets across equities, fixed income, real assets and what we call "total return strategies", to ensure our portfolios remain diversified at all times while aiming to add meaningful value through active asset allocation. Read about our philosophy and process for more information.
Our asset allocation decisions are driven by three key factors:
Valuations: we make strategic assessments of the absolute value of asset classes based on our analysis of the long-term risk premia embedded within prices.
Economic environment: our proprietary analytical tools help us to understand how macroeconomic factors are likely to affect different asset classes.
Market positioning: over the short term, asset class returns can be influenced by market dynamics, including shifts in investor behaviour. Our structured approach helps us understand how behavioural biases may affect market positioning and hence prospective asset price movements.
We strongly believe that having wide flexibility in terms of managing the size of our allocation to different asset classes and strategies is vital to capture returns and manage downside risk. For every asset class, our lowest possible weighting is zero, reflecting that we would not want to hold any asset where we expected negative returns.
We have the ability to invest in any market that can fulfil our core requirements on liquidity, transparency and costs. Our implementation options include directly investing in securities, passive strategies and derivative investments, including exchange-traded futures, exchange-traded funds, exchange-traded options and swaps.
How are total return strategies used in your portfolios?
By combining market directional and less directional sources of returns, we aim to broaden our opportunity set and enhance diversification beyond that of traditional approaches. We take a highly dynamic approach to asset allocation recognizing that specific asset classes can behave in different ways at different points in economic and market cycles. We assertively move our exposure towards asset classes with a favorable forward-return profile and away from those with the opposite characteristics. As a result, our exposure to individual asset classes can vary across a wide range and can be zero when we expect negative risk-adjusted returns
Our total return strategies play an important role, as they incorporate investments which aim to generate returns that are independent of broad asset class performance. This means they have the potential to make money whether markets are rising or falling.
What do derivatives add that I couldn't get from more traditional asset classes? Do they have an impact on the risks within your multi-asset portfolio?
Derivatives help us to manage risks across our multi-asset portfolios and enable us to implement our investment ideas more effectively.
The use of derivatives is an important aspect of managing multi-asset strategies. We use derivative instruments to hedge existing market exposures as part of efficient portfolio management, and in some cases, to achieve market exposures where none currently exists.
We also use derivatives to implement our total return strategies, which aim to generate returns that rely less on overall market direction.
Derivative markets are frequently deeper and more liquid than the underlying cash markets and therefore can potentially allow faster, cheaper and less disruptive access to market exposure than via cash instruments. Insight's investment philosophy highlights the need to precisely target attractive risks in the portfolios and this targeting can often be better achieved through the use of derivatives.
It is important to note that the vast majority of the derivatives used in Insight's multi-asset portfolios are exchange-traded. If the team uses over-the-counter (OTC) derivatives, these are closely controlled and monitored by the team, and counterparty exposure is collateralized daily.
What risk controls are in place?
In order to deliver the smoother path of returns we aim for, we bring together our principles of accessing a broad opportunity set and dynamic asset allocation within a robust risk framework which considers risk in multiple-dimensions:
- At a portfolio level to ensure appropriate levels of risk and diversification
- At an asset-class level, specifically, being mindful of drawdown risk when running risk asset directional exposures
- At an individual position or vehicle level to ensure that risk is not overly concentrated and that downside in the event of extreme moves is within tolerance levels.
How transparent are the holdings?
We provide detailed information on current holdings and performance attribution across our multi-asset portfolios. These are available in our standard reporting materials. For professional investors, we can provide detailed information focusing on specific time periods or aspects of the portfolio: please contact us for more information.
As of June 30, 2019. Assets under management (AUM) are represented by the value of cash securities and other economic exposures, and are calculated on a gross notional basis.*
*Insight North America (INA) is part of “Insight” or “Insight Investment”, the corporate brand for certain asset management companies operated by Insight Investment Management Limited including, among others, Insight Investment Management (Global) Limited and Insight Investment International Limited. Advisory services referenced herein are available in the US only through INA. Figures shown in USD. FX rates as per WM Reuters 4pm spot rates.
Includes employees of Insight North America LLC (INA) and its affiliates, which provide asset management services as part of Insight, the corporate brand for certain companies operated by Insight Investment Management Limited (IIML).
Past performance is not a guide to future performance. Investment in this strategy involves substantial risk of loss. The value of investments and the income from them can fall as well as rise and are not guaranteed, investors may not get back the original amount invested.
Insight North America LLC (INA) is a registered investment adviser under the Investment Advisers Act of 1940 and regulated by the US Securities and Exchange Commission. INA is part of “Insight” or “Insight Investment”, the corporate brand for certain asset management companies operated by Insight Investment Management Limited including, among others, Insight Investment Management (Global) Limited and Insight Investment International Limited. Insight’s assets under management are represented by the value of cash securities and other economic exposures, and are calculated on a gross notional basis. Advisory services referenced herein are available in the US only through INA.
The views herein represent the opinions of Insight and are subject to change based on subsequent developments. They are not intended as investment advice or to predict or depict the performance of any investment. The material contained herein is not intended to provide, and should not be relied on for, investment, accounting or legal tax advice. Further, this material does not constitute a recommendation to buy, sell or hold any security. No offer or solicitation for the sale of any security or financial instrument is made hereby.