MICHAEL BLAYNEY: The case for a balanced portfolio | Pendal Group
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MICHAEL BLAYNEY: The case for a balanced portfolio

Investing in a globally diversified portfolio with a mix of equities, bonds, alternatives, property and cash has proven a sound strategy for long-term wealth creation says Pendal’s head of multi-asset MICHAEL BLAYNEY

CONTRARY to some claims, the balanced portfolio isn’t dead.

Periods of volatility and changing correlations are a normal part of the market cycle, and that is what’s happening now, says Michael Blayney, head of Pendal’s multi-asset investments team.  

“While there are clearly a lot of headwinds to equities at present, Australia is fortunate that the local market is more reasonably valued than many offshore markets. Also, the resources weighting of the ASX helps provide a partial hedge against inflation,” Blayney says.

Blayney’s fund remains modestly underweight equities. But he says Australia, in a relative sense, is one of the more attractive markets globally.

Rising yields have hurt fixed income investments, but on a forward-looking basis Australian 10-year bonds now yield more than 4 per cent for the first time since 2014.

“This higher-running yield provides an attractive level of income relative to cash, and a cushion against the impact of any further increases in yields,” Blayney says. 

“While we retain an underweight allocation to bonds in portfolios generally, we do see Australia as relatively attractive compared to other major bond markets.”

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Opportunities

Times of market volatility tend to throw up opportunities. 

“While we’re not at the point, yet, of seeing ‘bargains’ like March 2020 or late 2008, the market falls have led to lower valuations across a range of asset classes,” Blayney says. 

Now is a good time to rebalance, whereby assets are trimmed after strong price increases and topped up after falls, he says.

“It is one of the simplest and best ways to incrementally improve long-term outcomes.

“In the present environment, this would naturally lead investors to trim cash and alternatives and top up cheaper equity and bond holdings.”

Blayney says equity markets tend to fall about one year in three — meaning they rise the other two.

“Investing in a globally diversified portfolio — with a mix of equities, bonds, alternatives, property and cash — has proven a sound strategy for long-term wealth creation over many decades, through wars, pandemics and a host of economic crises.

“Conversely, panicking after large market falls and selling has, generally, been a wealth-destroying activity for investors.

“You see classic examples of that behaviour at work in 2008 and early 2020.

“While we’ve been somewhat underweight equities and bonds in portfolios this year, these are relatively modest positions in the context of our long-term strategic asset allocations.

“We continue to believe investors should ‘stay the course’ in respect of their long-term strategies.”

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About Pendal’s multi-asset capabilities

Pendal’s diversified funds provide investors with a variety of traditional and alternative asset classes and strategies.

These include Australian and international shares, property securities, fixed interest, cash investments and alternatives.

In March 2024, Perpetual Group brought together the Pendal and Perpetual multi-asset teams under the leadership of Michael O’Dea.

The newly expanded nine-strong team will manage more than $6 billion in AUM and create a platform with the scale and resources to deliver leading multi-asset solutions for clients.  

Michael is a highly experienced investor with more than 23 years industry experience, including almost a decade leading the team at Perpetual.

Find out more about Pendal’s multi asset funds:

Contact a Pendal account manager here


This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at June 22, 2022. PFSL is the responsible entity and issuer of units in the Pendal Multi-Asset Target Return Fund (Fund) ARSN: 623 987 968. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com

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