Six local borough councils have awarded a £30m multi-asset mandate in a sign that demand for the asset class, which has had a challenging start of the year, might increase again.
Local treasuries, including Bedford Borough Council, Folkestone & Hythe District Council, Dartford Borough Council and Scottish Borders Council have invested in Kames’ £522m Diversified Monthly Income Fund, a multi-asset strategy investing in, among others, corporate bonds, equities, listed property and specialist income.
According to Kames, local authority treasuries are increasingly broadening their approach towards investing in a bid to enhance returns in the low interest environment.
Multi-asset funds have had a challenging start of the year, being hit by a combination of falling stock markets and rising bond prices, however, the performance of many flagship multi-asset funds improved in the second and third quarter.
Kames Diversified Monthly Income fund aims to deliver a target income of 5% with a total return target of 7% to 8% a year. Over the last three years, it has offered an historic yield of 5.13%. Yet like many multi-asset strategies performance dropped to -2.60% in the first quarter of the year and is now gradually restoring to 1.84% for Q3, according to Morningstar.
