Should You Invest In A Multi-Asset Income Fund?

When you’re nearing retirement and guaranteed income is becoming more of a priority, selecting the right type of income fund is key. One of the leading traits that most retirement-age investors seek in an income fund is stability and security to preserve (and hopefully grow) their capital for as long as possible. Those who want to mitigate risk sometimes turn to multi-asset income funds because of their built-in diversification. But is a multi-asset income fund right for your goals? Let’s dig deeper into these funds and what alternatives you may consider instead.

How Do Multi-Asset Income Funds Work?

Multi-asset income funds, sometimes called multi-asset class funds, offer a combination of asset classes (such as cash, equity or bonds) as a single investment. Multi-asset class investments contain more than one asset class in a portfolio to lower the overall risk profile. The allocations and types of classes will vary depending on the goals of the fund, with some more risky than others but paying stronger returns.

Why Do Some Investors Choose Multi-Asset Class Funds?

Unlike a balanced fund that focuses on meeting or beating a particular benchmark of performance, multi-asset class funds are designed to serve a certain investment role, such as preserving capital by exceeding inflation. As the name implies, the assets within these funds span many types of securities, and sectors, including real estate and other types of securities. This diversification gives these funds enormous flexibility in meeting investor goals. Most multi-asset income funds are actively managed, meaning a manager or group of investors make decisions based on market conditions to maximize returns with the least amount of risk. 

How Are Multi-Asset Class Investments Structured?

Multi-asset income fund managers seek to increase the diversification of their portfolios by distributing investments throughout several classes. This reduces volatility when compared with holding one class of assets, but it’s key to note it also limits the potential returns. For example, a multi-asset income fund might hold bonds, stocks, cash, and real property, whereas a single-class income fund might only hold stocks or bonds. One type of asset could far outperform others during a particular time period, but historically, no single asset class will outperform the rest for every period.

How Multi-Asset Income Funds Distribute Their Returns

Multi-asset income funds focus on supplying a stream of income to retirees without running out of capital by minimizing risk. Multi-asset income funds usually pay their investors on a monthly or quarterly basis, providing steady secure income to cover the essentials.

While multi-asset income funds are designed to be safer investments, the yields of these types of funds still depend heavily on the performance of the markets for each particular asset class. You can still suffer capital erosion with multi-asset investments, so income isn’t exactly guaranteed. That said, these are still one of the safest ways to invest for income after retirement.

Types of Assets That Multi-Asset Income Funds Invest In

Multi-asset income funds invest in a range of assets, which can include stocks, bonds, real estate investment trusts (REITs), and commodities. Each of these assets can offer different benefits and risks to investors, and multi-asset income funds aim to balance these assets to generate income and manage risk. For example, stocks can offer potential capital appreciation and dividend income, while bonds can provide steady income and help reduce portfolio volatility. REITs can offer exposure to the real estate market, and commodities can provide diversification and protection against inflation. By investing in a diversified mix of these assets, multi-asset income funds aim to generate a steady stream of income while managing risk for investors.

Which Type Of Multi-Asset Income Fund Is Best?

The most significant factor in deciding whether a multi-asset income fund is right for you is how much security in preserving your savings you need. For the most risk-averse, multi-asset income funds that are centered on government bonds and other low-risk assets that complement one another are a solid option.

Funds Based On Risk Tolerance Levels

There are numerous mutual fund companies that offer asset allocation funds designed to match well with an investor’s risk tolerance level. These funds can vary from aggressive strategies to ultra-conservative. An aggressive investment fund typically has a much higher allocation to equities, with some as much as 100%.

When you’re after more significant yields without a one-sided asset allocation, you may want to opt for a multi-asset income fund that is more heavily weighted toward stocks or real estate in high-performing markets but also holds other low-risk investments like government bonds. These will come with slightly more risk, but attractive returns that deliver more substantial income after retirement.

Income Funds That Are Backed By Real Estate

Retirees who want the greatest amount of stability for their hard-earned money find real estate-backed funds a more attractive option than multi-asset income funds for generating a secure stream of income for the duration of their life after retirement.

Real estate funds offer high levels of security compared with funds that focus on stocks, which fluctuate in value from minute to minute. This is how real estate funds can deliver attractive yields that deliver retirees more income with each payout. What real estate categories do these income funds buy in order to minimize risk levels?

How Do Real Estate Funds Manage Risk?

The real estate income funds often have far higher yields than a multi-asset fund, making them very attractive to those who want enhanced returns without taking on huge risk levels. Real estate funds often focus on commercial properties that can deliver both higher levels of financial security in relation to the returns, in addition to possible tax benefits. So what types of commercial real estate do these income funds hold in their portfolios?

Commercial real estate income fund managers usually hold numerous categories of commercial properties to limit downside risks while still delivering high payments on capital. The most common types of properties you’ll find in these funds include:

  • Industrial, Manufacturing, and Warehousing
  • Multifamily Apartment Complexes
  • Class-A Retail Space
  • Office Buildings

The Perfect Real Estate Income Fund For Post-Retirement

If bringing in a consistent, predictable monthly income post-retirement is integral to your financial plans, finding an income fund that keeps your risks low is a must. Saint Investment provides the perfect option with a real estate fund that will give you steady, secure income each month. Our team of real estate experts carefully scrutinize every single property before it goes into our income funds. You can leverage our real estate knowledge to meet your retirement objectives with our real estate income fund. Enjoy the peace of mind provided by detailed reporting and full transparency. Call (323) 483-0291 today to get started!

Frequently Asked Questions:

What is a multi-asset income fund?

A multi-asset income fund is a type of investment fund that seeks to generate income for its stockholders by investing in a number of different asset classes. These asset classes can include equities, bonds, and real estate investment trusts (REITs), amongst others.

What are the benefits of investing in a multi-asset income fund?

Diversification across various asset classes provided by multi-asset income funds can help reduce portfolio risk and volatility. They are also designed to generate income for investors, which can be appealing to those who desire a consistent financial flow from their investments.

What are the risks associated with investing in a multi-asset income fund?

Risks associated with multi-asset income funds include financial, market, and interest rate risk. It’s critical to comprehend the fund’s risks and confirm that they match with your financial objectives and risk tolerance.

What are the fees associated with investing in a multi-asset income fund?

Multi-asset income funds charge fees for management and other costs, just like any other investment fund.

How do I choose a multi-asset income fund?

When choosing a multi-asset income fund, it’s important to research the fund’s historical performance, fees, and risks.