Newton's Stewart warns on derivatives during market stress

Newton's director of investments Iain Stewart has warned investors using derivatives to diversify returns may face problems during times of market stress, as the industry increases its focus on multi-asset investing.

Stewart (pictured), running the £5.2bn Newton Real Return fund, said the fund industry is in a transitional phase, moving towards a multi-asset approach which could see more investors using complex instruments such as derivatives. "It is likely we are in the early stages of a major transition which will see a move away from the narrow specialisation and index based approaches which were encouraged by the bull market from the early 1980s until the early part of last decade," said Stewart. "We focus on using absolute assets. Leveraged fixed income products can do well for years, but the...