7IM has added a medium-term ‘trend following’ strategy to its Pathbuilder muti-asset fund range. The Pathbuilder range provides advisers with a lower cost ‘passive’ option for their clients, with deep diversification.
The Pathbuilder funds are underpinned by 7IM’s established Strategic Asset Allocation (SAA) process, but to keep costs down the SAA focuses on allocating to the most liquid and cost-effective traditional assets. The newly implemented trend-following strategy, which accounts for up to 4% of the portfolios, seeks to offer significant diversification to the drivers of the returns of many of the traditional asset classes within the SAA.
Trend following can take advantage of trends in both rising and falling markets to make profits, which can be helpful for the portfolio when other return seeking assets are not performing well. It takes advantage of the fact that rising markets tend to continue to rise, and conversely that falling markets tend to continue to fall (i.e. they “trend”).
Trend strategies have delivered strong performance during market turmoil and add a further layer of diversification and risk management to traditional passive strategies. They have additional defensive properties in environments where market concentration can leave investors highly exposed, like in 2022, for example.
Launched in 2020, 7IM’s Pathbuilder range comprises four funds with an annual management charge of 0.22%. The funds are available on the 7IM Platform as well as a range of other adviser platforms.
“Matthew Yeates, Deputy Chief Investment Officer at 7IM, said: “As many traditional assets continue to move in lockstep, access to deeper levels of diversification has never been more important. To respond to this, we’ve bolstered our Pathbuilder range with ‘trend following’. Whilst we have already used trend following for some time in our more active portfolios, we feel the setup can also be very fruitful for our passive portfolios given the current macro environment.
“Passive to many people can simply mean “low cost”. For us it’s important that “passive” means a properlydiversified portfolio that follows a strategic asset allocation. This means constructing something more robust than simply ‘cap weighting’ equities and watering that down with some government bonds. This evolution of Pathbuilder is our latest thinking for a fund vehicle taking that approach.”
Chris Justham, Managing Director of Intermediary Solutions at 7IM said: “We’re always looking at how we can enhance our offering for planners so that they can deliver the best outcomes for their clients. Following recent conversations with a number of our key partners, we’ve listened to feedback and improved our Pathbuilder range to offer deeper levels of diversification. We’ve been innovators in the passive industry for 16 years and are pleased to be able to offer something different here.”
