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Percival Stanion, Head of Asset Allocation, Baring Asset Management

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Baring Dynamic Asset Allocation Fund reaches GBP2bn AUM

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The assets under management in Baring Asset Management’s flagship institutional multi-asset fund, the Baring Dynamic Asset Allocation (DAA) Fund, have grown to over GBP2 billion.

Launched in January 2007, the DAA Fund aims to deliver long-term equity-like returns (defined as Libor + 4%) with less risk than holding an equity-only portfolio. Over the three years to 31 March 2010, the fund has produced annualised returns of 8.3% compared to the Libor +4% target which returned 8.1%. Over the same time period the FTSE All Share was down by 0.2%. The annualised volatility of the fund over the three years was 8.9% versus 19.3% for the FTSE All Share. The fund’s ability to move quickly and take advantage of tactical asset allocation opportunities has accounted for much of its success since launch. 
 
Since the beginning of 2010, the fund has seen inflows of over GBP277m, including new mandates from the pension schemes of Selfridges, the Former Registered Dockworkers, Mouchel and Archant.
 
“In these unstable economic and political times, pension funds are seeking investment solutions that continuously deliver equity-like returns whilst offering less risk,” says Percival Stanion (pictured), head of asset allocation at Barings. “Tactical asset allocation is no longer a fashionable trend, it is now acknowledged as a key component of pension funds’ investment portfolios.”
 
Having hit new highs in recent weeks, an asset class that is making headlines right now is gold. Indeed the DAA Fund has held gold bullion since its inception. 
 
“Our commitment to gold since inception has paid us dividends in terms of a stable and consistent inflation hedge in the fund, adds Stanion. “The sovereign debt problems in Europe combined with the uncertainty driven from the recent political activity in the UK means that gold offers a stable alternative to currencies now even more so than usual. Unlike other investors in the market, we believe this is a long-term holding and so we won’t be jumping ship as soon as more economic normality returns.
 
“Looking ahead, the world stage seems likely to be dominated by two very contradictory trends; slow growth and fiscal contraction in the West but booming activity in Asia. We have reoriented our portfolio accordingly by building up exposure to multi-national companies that enjoy the best of both worlds. Corporate and convertible bonds also still hold value in a world of slow recovery in the West, while our inflation hedges in the form of gold and also agricultural equities look better value than index linked bonds and give us some protection against politicians taking the easy way out through inflating away debt mountains.”

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