- A multi-asset fund invests across equities, bonds, REITs, and other asset classes in a single portfolio, offering diversification without requiring investors to manage multiple holdings.
- Investors can access multi-asset funds and ETFs through two retirement savings platforms: the CPF Investment Scheme (CPFIS) and Supplementary Retirement Scheme (SRS).
- Multi-asset funds provide diversification across asset classes, reducing concentration risk.
- Currently, Singapore imposes no capital gains tax on individuals, making fund-based investing relatively tax-efficient for retirement savers.
Concentrating investments in a single asset or market leaves a portfolio exposed to any downturn in that area. A multi-asset fund addresses this by holding equities, bonds, property, and other asset classes within one structure so that weakness in one area may be offset by stability or gains in another. For investors building long-term savings, this built-in diversification reduces the need to pick individual securities or time entry and exit points across different markets.
So, what exactly sits inside these funds, and why does the mix matter?
What are asset classes in diversified portfolios?
An asset class is a grouping of investments that share similar financial characteristics and tend to respond in comparable ways to market conditions. Equities, bonds, real estate, and commodities each respond differently to economic shifts: interest rate changes might lift bond prices while weighing on property stocks.
This difference in behaviour is what makes diversification work. When one component of your portfolio falls, another may hold its value or rise, dampening the overall impact.
What is a multi-asset fund?
A multi-asset fund is a professionally managed investment vehicle that holds a combination of asset types within a single portfolio. Instead of buying an equity fund and a bond fund separately, you get exposure to both (and often more) through one purchase.
The core idea is straightforward: different asset classes tend to behave differently under the same market conditions. When equities fall sharply, bonds often hold steadier, and vice versa. By blending them, a multi-asset fund aims to deliver a smoother return profile over time. That smoothing effect matters most for investors with long time horizons and limited appetites for large drawdowns.
What are the common multi-asset components in fund portfolios?
A typical multi-asset fund draws from several building blocks. Each serves a distinct role in the portfolio's risk-and-return profile. Multi-asset funds generally invest across shares, bonds, or a balanced combination and may also target specific sectors, regions, or themes.
Equities
Equities represent ownership stakes in companies. They offer the highest long-term growth potential among traditional asset classes but also the greatest short-term volatility. In a multi-asset fund, equities drive capital appreciation. The Straits Times Index (STI) tracks the top 30 largest and most liquid SGX-listed companies, serving as Singapore's recognised equity benchmark.
Bonds and fixed income
Bonds pay periodic interest and return the principal at maturity, providing income and relative stability. Within a multi-asset portfolio, bonds may help moderate overall volatility, though the degree of stabilisation depends on the interest rate environment, the types of bonds held, and prevailing credit conditions.
Real estate investment trusts (REITs)
REITs are investment vehicles that pool capital to own and operate income-generating real estate assets such as commercial, industrial, or retail properties. In a multi-asset portfolio, REITs provide exposure to property markets alongside regular income distributions, though their performance is subject to property market conditions, interest rate movements, and broader economic factors.
Commodities and alternative assets
Gold and other commodities tend to move differently from equities and bonds, providing an additional diversification layer. Commodities have at times been used as a partial hedge against inflation, although their prices can be volatile and may be difficult to predict, especially over shorter time horizons.
Cash and cash equivalents
Cash holdings and short-term instruments like SGS Treasury bills provide liquidity and capital preservation. Within a multi-asset fund, a cash allocation acts as dry powder: available for redeployment when opportunities arise or markets dislocate.
What are the benefits and drawbacks of multi-asset funds?
A balanced view matters here. Multi-asset funds offer genuine advantages, but they carry trade-offs that investors should weigh honestly.
- Diversification in one holding: you gain exposure to multiple asset classes through a single fund without managing separate equity, bond, and REIT positions yourself.
- Professional rebalancing: the fund manager adjusts the mix over time, maintaining the intended risk profile.
- Convenience for retirement accounts: for investors using CPFIS or SRS, a single multi-asset fund may serve as a straightforward core holding.
- Potentially smoother returns: blending asset classes with different return patterns can reduce the severity of drawdowns compared with a single-asset portfolio.
- Layered fees: multi-asset funds may invest in underlying funds, each carrying its own charges. These costs compound over long holding periods.
- May lag in strong single-asset rallies: when equities surge, a multi-asset portfolio may fall behind a pure equity portfolio, as some of the fund is spread across bonds, cash, and other assets.
- Manager dependence: your outcome relies heavily on the fund manager's allocation and security selection decisions.
How do multi-asset funds manage diversification?
How a multi-asset fund divides its capital across asset classes matters as much as which classes it holds. Two main approaches dominate.
Strategic asset allocation
Strategic allocation sets a long-term target mix based on the investor's risk tolerance and time horizon. The portfolio evolves as markets move, and the manager periodically rebalances back to the target. This approach suits investors who want a disciplined, low-turnover structure.
Tactical asset allocation
Tactical allocation allows the manager to deviate from the strategic mix to exploit shorter-term market conditions. If the team expects equity weakness, it might temporarily raise the bond or cash weighting. This can add value, but it also introduces higher turnover and greater reliance on market timing. This is where professional active managers, with dedicated research teams and on-the-ground market knowledge, are equipped to add value.
For investors evaluating multi-asset funds, the quality of the investment team matters as much as the allocation framework. Eastspring Investments manages multi-asset strategies with on-the-ground teams across ten Asian markets, combining both strategic allocation disciplines and the ability to respond actively to changing market conditions.
Rebalancing approaches
Rebalancing is the process of bringing a portfolio back to its target allocation after market movements push it off course. Some funds rebalance on a fixed calendar (quarterly or annually). Others use threshold triggers, rebalancing only when an allocation drifts beyond a set band.
For investors, rebalancing within a fund is particularly efficient. No capital gains tax applies to individuals on gains realised inside the fund structure, so the manager can adjust positions without creating a tax event for unitholders. However, investors should confirm their own tax position with a qualified adviser.
What does it cost to invest in a multi-asset fund?
Fees deserve close attention because they compound over decades. Understanding what you pay and what you receive in return can help you make informed comparisons across fund options.
| Fee type | Typical range |
|---|---|
| Total expense ratio (TER) | 1.0%–2.5% of NAV per annum |
| Sales charge (upfront) | Varies by distributor |
| Management fee | Included within TER |
| Trustee and custodian fees | Included within TER |
The TER captures most ongoing costs, but upfront sales charges sit on top. Some platforms waive or discount these charges, so comparing the total cost of ownership across distributors is worthwhile.
How do multi-asset funds fit a retirement portfolio?
A multi-asset fund suits retirement portfolios precisely because retirement is a multi-decade commitment. Over 20 or 30 years, you will pass through bull markets, bear markets, recessions, and recoveries. A fund that automatically rebalances across asset classes removes the temptation to react emotionally at the worst possible moment.
For investors, the most practical access points are the CPF Investment Scheme (CPFIS) and the Supplementary Retirement Scheme (SRS). Both are designed for long-term retirement savings and offer meaningful tax advantages.
If you're seeking a single-fund retirement solution, a multi-asset fund accessed through SRS or CPFIS combines professional management, automatic rebalancing, and tax efficiency in one structure.
Key takeaways on multi-asset fund diversification
A multi-asset fund offers investors professionally managed exposure across equities, bonds, REITs, and alternative assets within a single portfolio. This diversified approach can help reduce concentration risk, although market volatility may still affect returns. Additionally, investors can access multi-asset strategies through unit trusts and ETFs, each with different fee structures and investment objectives.
Eastspring Investments' multi-asset solutions are designed for investors with long time horizons who want active management, disciplined rebalancing, and broad asset class access, all through a single fund. Explore our range of multi-asset solutions →
Read blog → Bond yield: Understanding how they work and why they matter
Frequently asked questions
- mas.gov.sg — Offers of collective investment schemes
- moneysense.gov.sg — Understanding unit trusts
- mas.gov.sg — SGS bonds
- ask.gov.sg — CPF Q&A
- reitas.sg — Overview of the S-REIT industry
- oecd.org — Pensions at a glance: Singapore
- taxsummaries.pwc.com — Singapore individual taxes
- moneysense.gov.sg — Unit trusts guide
- cpf.gov.sg — CPF Investment Scheme
- mof.gov.sg — Supplementary Retirement Scheme
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