Multi-Asset Capabilities: Key Industry Moves and Strategic Insights

This year, we are witnessing a significant shift as leading firms make strategic moves to expand their multi-asset (MA) offerings. Notable developments include BlackRock’s expansion into infrastructure and private markets through its acquisitions of Global Infrastructure Partners (GIP),¹ LGIM’s merger with L&G capital,² the strategic partnership between Schroders and Phoenix Group,³ and Janus Henderson’s expansion into private credit.⁴

While it’s fairly predictable that these firms have identified opportunities to diversify their asset mix and improve returns, it is too soon to declare these moves an unqualified success. Nevertheless, these actions underscore a growing focus to achieve an age-old goal: firms are enhancing their multi-asset capabilities to better meet the evolving demands of investors.  

Strategic consolidation and expansion in multi-asset management 

These strategic initiatives are not isolated but part of a broader, industry-wide transition toward a more integrated and client-centric approach to multi-asset management. But why may these firms be so focused on MA strategies? As investors increasingly seek diversified, resilient portfolios, these moves demonstrate a clear response to the demand for more comprehensive investment solutions among diverse instrument groups whose returns do not normally correlate with one another.  

Consider the recent example of BlackRock’s acquisition of GIP. This move was not just about diversification but also about tapping into a growing sector that aligns with institutional investors’ appetite for stable, long-term returns. Similarly, LGIM’s merger with L&G Capital enhances MA capabilities by consolidating resources, integrating advanced technology, and streamlining operations—critical factors in managing a broader range of assets effectively. 

Technology as a catalyst for innovation and efficiency 

By broadening and diversifying their offerings, these firms are positioning themselves to capture emerging opportunities in infrastructure, private credit, and other alternative asset classes. This trend highlights a shift from traditional assets to a more expansive portfolio strategy that can demonstrate durability over the long-term, offering more than a reflection of the swings in equity markets that grab most of the headlines. 

These developments further emphasize the critical role of advanced technology and streamlined operations in managing increasingly complex portfolios. Investment technology can no longer merely cope with alternative instruments, it must integrate them into core processes and support their more specialised attributes, such as asset servicing, ad hoc capital outlay, and other event-driven transactions.

Through moves of the likes of Schroders and LGIM, it’s becoming apparent—in order to remain competitive, firms are adopting technologies and operational efficiencies that support a more agile, responsive investment approach.

Building and Maintaining Multi-Asset Capabilities

As firms intensify their focus on MA strategies, building and maintaining these capabilities become critical to long-term success. Key aspects of developing robust MA capabilities include sector selection, the build-vs-buy debate, asset servicing as a core component, and ongoing maintenance.

Who manages the managers?  

Careful selection of sectors within a multi-asset strategy is crucial—and oversight of that strategy is key to supporting better client outcomes and enhancing overall portfolio resilience.

Yet this creates a challenge for firms by introducing competing interests. For instance, the flashy new order management system with real-time prices and cash is useless to the managers of the agriculture loan book, and good luck hounding your infrastructure desk each month for comments on the windfall from their investment in a light-rail system with a 25-year time horizon. New entrants to the MA space, regardless of size and scale, will walk a fine line tempering their expectations of a constant feedback loop relative to “the market” when considering all instrument types.

The capability dilemma: Should you DIY or just bring in the experts?  

When it comes to developing multi-asset capabilities, firms must face the important decision of whether to develop these capabilities internally or partner with or acquire external specialists.

• Building capability in house: Developing MA capabilities internally offers greater control and customisation. Firms can tailor their strategies and processes to fit specific needs and objectives, ensuring alignment with their unique vision and operational structure. This approach can also create proprietary methods that differentiate the firm from competitors. The risks of the build approach come with the complexity of effectively expanding into new areas and the extended timelines often required to do so.
  
  
• Buying or partnering: Alternatively, acquiring established capabilities or partnering with specialised firms can offer faster scalability as well as access to advanced technology and expertise. A platform that fully supports a consolidated, multi-asset portfolio view, with associated front-to-back processing, is still a unicorn.5 This approach would enable firms to quickly integrate solutions once they do come along, as well as benefit from the experience of established players, potentially accelerating time-to-market and reducing development risks. However, the integration of a distinct culture, as well as perceptions regarding fair allocation of merit compensation and internal investment create challenges far beyond the generation of favourable returns.

Is asset servicing the unsung hero of multi-asset management?

When embarking on a new multi-asset management strategy, firms should rethink how they approach asset servicing—rather than treating it as another administrative task, make it a central part of your strategy. Integrating asset servicing with investment management in this manner will better equip firms to handle the complexities of MA portfolios. This approach to asset servicing sets the stage for accurate monitoring and reporting on the expanded MA strategy, which in turn enables improved transparency and decision making.

Are you in it for the long haul?

Maintaining multi-asset capabilities requires ongoing attention to several factors. Firms must continuously adapt to market trends and technological advancements to stay competitive. This involves regularly updating strategies, integrating new technologies, and ensuring alignment with evolving client needs. Effective maintenance also includes monitoring performance, managing risks, and adjusting the portfolio in response to market shifts. By staying proactive and responsive, firms can sustain robust MA capabilities and deliver long-term value to clients.

With this year’s string of high-profile acquisitions, mergers, and partnerships, it’s clear that firms regard multi-asset capabilities as an effective means to respond to investor demand for greater diversification and resilience. Yet, the effectiveness of these moves is still to be seen.

Though improvements in technology may have provided the fertile ground for change, long-term success hinges on organisational and operational change management as much as the tech foundations. Careful selection of where to expand and how expansion is best achieved are key, but in the end, an ongoing commitment to maintenance of the new multi-asset capabilities is where rubber meets the road and investor demands are satisfied—or not.

¹ BlackRock Agrees to Acquire Global Infrastructure Partners (“GIP”), Creating a World Leading Infrastructure Private Markets Investment Platform (2024) BlackRock. And BlackRock to Acquire Preqin, Leading Private Markets Data Solutions Provider (2024) Aladdin by BlackRock.
² LGIM CEO to step down as firm undergoes restructure (2024) FT Adviser. 
³ Phoenix Group and Schroders to launch new private markets investment manager with £1bn initial commitment (2024) Schroders. 
⁴ Janus Henderson expands private credit footprint with stake in $6bn boutique (2024) Financial Times. 
⁵ Can Asset Owners Achieve a Consolidated View Across Portfolios? (2023) Citisoft.