Translation of a survey article originally published in AL-IN magazine vol. 54, December 2019.
AL-IN, a magazine for institutional investors in Japan, conducted its first survey about the use of multi-asset strategies among its corporate pension subscribers in 2013. The 4th and latest survey was conducted in November 2019. What does a multi-asset strategy mean now and how does it address today’s more challenging investment landscape?
This is Part 2 (of 2) of the survey’s findings.
Why do Japanese corporate pensions employ the multi-asset strategy?
What reasons do investors give for adopting the multi-asset strategy? In Chart 3 (multiple answers allowed), the top three responses chosen — mostly unchanged from the previous survey — were "to curb downside risks" chosen by forty-four investors (67.7%), "to facilitate quick changes in allocation" by thirty-two investors (49.2%), and "to diversify benefits of asset allocation" by twenty-five (38.5%). On the other hand, "to earn absolute returns" dropped from 2nd place in the 2017 survey with thirty investors (54.5%) to 4th place with twenty-four investors (36.9%).
Given that curbing downside risk was the most common reason for adopting a multi-asset strategy, what level of risk are investors comfortable with? Twenty-two investors (34.4%) said 5%, eleven (17.2%) said 3%, seven (10.9%) replied 2%, and seven more said 6%.