Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
AMP shuts multi-asset Dynamic Markets fund
Falling out of the headlines surrounding AMP this week was the low-key decision for the group to shut its Dynamic Markets Fund and ETF (former ASX code DMKT). Established in 2000 and managed exclusively by Nader Naeimi for the last five years, the strategy struggled to gain traction, and assets, due to persistent underperformance.
At last count, the fund had just $180 million under management across both the ETF and unit trust, with AMP management deeming that at such a low level and “given the fixed operating expenses, will likely lead to an increase in management costs ………Closing the fund is in the best interests of investors.”
The fund, like many others, was blindsided by the pandemic, falling 9.5% over the 2020 calendar year. This followed a strong performance in 2019, when it was up 11.1% as both bond and equity markets delivered strong returns. Whilst the ASX-listed ETF version (ASX:DMKT) struggled since its inception in 2016, the underlying unit trust and managed fund had delivered a return of 5.76% since inception in 2011, broadly in line with its objective.
Hindsight is obviously a wonderful thing. Originally billed as a core portfolio exposure leveraging AMP’s deep research network to deliver returns of CPI + 4.5%, the fund has struggled to live up to its title in recent times. “Identifying and investing in opportunities, not just markets” says the website, with the group evidencing research that shows asset allocation is the main driver of returns. If you get it right, of course.
According to AMP, it was a “strategy that regularly adjusts its allocation across markets and asset classes can help ensure investors have the appropriate exposure at the most opportune time.” The strategy has sought to deliver dynamic asset allocation by actively adjusting the “split of investments across asset classes where we have the strongest conviction based on our dynamic asset allocation investment process and in response to expected market changes.”
Such was the underperformance in recent years and the inability to market the strategy that ratings house Lonsec had reduced its view to just ‘investment grade’.
