Investing in a complex world: Artemis’ Jack Holmes asks can complex alternatives help? 

In an age of uncertainty and complexity, can the answer really be to keep things simple? In the following article, Jack Holmes, co-manager of the Artemis Monthly Distribution Fund, explores why multi-asset investors may be better served by adopting straightforward strategies focused on equities and bonds.

This article was featured in our Multi-asset Fund Insights 2025, looking at the latest thinking and analysis into what’s going on within this key market segment. Readers can check out the full publication here.

Historian Yuval Noah Harari wrote: “Humans think in stories rather than facts, numbers or equations – and the simpler the story, the better.” In a complex world, something similar could be said of multi-asset investment funds.  

 Advisers and investors alike need a simple story they can understand. Less obvious, perhaps, is that so do the people who manage these strategies. 

 One-stop multi-asset solutions come in a variety of formats, but many include a vast array of complex alternatives. With the threat of a global trade war hanging over us, these hold some intuitive appeal – we all like the idea of assets seemingly immune to Trump’s tariffs and tweets and interest rate movements. Too often, though, they fail investors.  

I would say this. Cards on the table: I co-manage the Artemis Monthly Distribution Fund, which is a combination of just two assets – equities and bonds. We do not use derivatives, and we do not use complex strategies. Yet over the past one, two and three years the team has been working together the fund is in the top 10 in the “Mixed Assets – Balanced” universe. That is a universe of over 400 funds.  

What’s the point of alternatives? 

So what is wrong with alternatives? Many promise high-single-digit total returns without too much volatility. I think that by focusing on better-quality, short-dated high-yield credit you can find the same nirvana more reliably.  

Some might say this is a time for gold. Gold does not pay dividends. Gold producers do. Our second-biggest equity holding is Canada’s Kinross Gold Corporation.  

In my experience, you can find nearly everything you are looking for as an investor in equities and bonds.  

Reducing correlation risk 

Keeping things simple also helps manage correlation risk. It starts with the managers talking to each other. I am not a fan of strategies where each asset stream is managed independently. I might be given a fixed income benchmark; the equity manager their own benchmark. This just increases the risk of everyone pointing in the same direction.  

We saw this in many funds in 2022. The equity portions were being run in the best-performing way, which was in longer-duration, high-growth assets. On the fixed income side, if you were using a global aggregate index as your benchmark, that also tilted you towards long-duration in order to lift returns in a low-yield world. In theory, you had a diversified portfolio – perhaps 50% equities, 50% fixed income. But both sides of the equation plunged when interest rates suddenly shot up. 

Within our strategy, if we were just running a fixed income portfolio with no kind of consciousness of what the equity side was doing, we would probably own a lot more banks. We do not, because banks represent a significant overweight in the equity side of the portfolio. Similarly with energy. I particularly like the energy sector within the high-yield space. But if I find equity manager Jacob de Tusch-Lec planning to run with four or five energy positions on the equity side then we do not want to double up.  

Nimbleness 

To the virtue of simplicity, you might add nimbleness. I understand from a marketing perspective why providers may have a rigid asset allocation division between bonds and equities if they have several strategies and want to distinguish between them. But what drives our asset allocation is not a top-down view on markets, but instead the relative attractiveness of individual opportunities and sectors within each market which means the balance between equities and bonds fluctuates opportunistically.  

Active management  

 Finally, what about the case for active management in multi-asset investing? If you were to take a passive approach to this kind of portfolio you would probably have a lot of exposure to US tech, as the US now accounts for around 65% of the MSCI World Index and is dominated by the Magnificent 7 stocks. Meanwhile, the bond side would be almost exclusively government bonds and investment-grade bonds and so much more reliant on duration – and vulnerable once more to interest rate movements.  

In a higher-inflation, less globalised world – with massive government deficits and stretched balance sheets – this does not make sense. We saw in April days when both the S&P 500 and prices of US treasuries were down significantly – so these government bonds provided no protection.  

 Simple may not be sexy, but I would say it is safer and more sensible – and that is a story we know clients like.  

About Jack Holmes 

Jack co-manages Artemis’ ‘global high yield bond’ strategy, ‘high income’ strategy and ‘short-duration strategic bond’ strategies, plus the bond element of Artemis‘ ‘monthly distribution‘ strategy. Jack joined Artemis in June 2019 from Aegon Asset Management , where since 2016 he co-managed a range of high yield bond funds and was involved in the management of the Strategic Bond strategy. Before that, he was an investment analyst at Standard Life Investments. Jack began his career as an economist at Cambridge Econometrics after graduating from Trinity College Dublin with a first-class honours degree in economics. He is a CFA charterholder.