How multi-asset investors are coping as equity volatility drops

Fund managers are facing pressure to buy high risk assets in order to meet their funds' targets in an environment of falling equity volatility.

Managers of funds such as the multi-asset range at Aviva Investors and the Harwood Multi Manager range, which have volatility targets, said even a 100% allocation to equities is not enough to reach the targets on the riskier portfolios. Equity volatility is measured by looking at the standard deviation of returns from the mean. As equity markets have experienced a relatively steady rally since the start of the year, this deviation has been slight, which means volatility is low. For example, the rolling 12-month volatility of the FTSE All Share has dropped from highs above 16% in July ...