Liberalism and conservatism are not just for the political pundits. When it comes to ETF investing, investors can also opt to get conservative when they want exposure to a multi-asset strategy, which could be achieved through the Invesco Conservative Multi-Asset Allocation ETF (PSMC).
There are times when investors need to be risk averse, especially when volatility hits hard. However, a multi-asset strategy can give investors the asset diversification their portfolio needs without dialing up the risk.
PSMC seeks total return consistent with a lower level of risk relative to the broad stock market. The fund seeks to achieve its investment objective by allocating its assets using a conservative investment style that seeks to maximize the benefits of diversification, which focuses on investing a greater portion of fund assets in Fixed Income ETFs, but also provides some exposure to underlying ETFs that invest primarily in Equity ETFs.
Specifically, the fund’s target allocation is to invest approximately 5%-35% of its total assets in Equity ETFs and approximately 65%-95% of its total assets in Fixed Income ETFs. You get exposure to this active management style with a 0.39% expense ratio.
All That Glitters Is Not Gold
When it comes to getting a portfolio diversification, adding some gold to a portfolio is hard to beat given the way the precious metal has climbed this year. However, Dipika Jaikishan recently wrote in Money Control that a multi-asset strategy can also work as well, if not better.
“As an investment, gold is undoubtedly a great option,” the article said. “However, as it’s always said, gold provides great financial security in troubled times and may not play a heroic role in your portfolio. Look at gold as a hedge, and not an investment. This year, consider investing in products other than gold, look at multiple asset classes and in avenues where you don’t need to invest large amounts of money.”
“A multi-asset fund is a great addition to a portfolio considering it is required to invest in at least 3 asset classes and gives you exposure to equity, debt, and an additional asset class, possibly gold,” the article added. “The benefit of these funds is that the fund manager makes the decision to buy or sell assets while you can sleep at ease. Multi-asset funds carry less risk than most hybrid funds as the investments are spread across multiple asset classes. A balanced advantage fund would be a good addition to your portfolio.”
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