7IM today marks the fifth anniversary of its Pathbuilder muti-asset fund range, which has now grown to £700m assets under management.
Rather than blindly following market-capitalisation weighting schemes, 7IM adopt a strategic approach to diversification, updating their asset allocation annually, and allowing tweaks to asset classes if merited. While far from being a tactical approach to money management, this allows for changing data on time horizons which matter to investors.
The range has kept pace or outperformed its peers through a period of strong US outperformance though thinking differently about diversification over the long term. For example, allocations to Emerging Market bonds have delivered consistent returns, without excess risk, and a careful blend of equities has managed to hold its own with more US-heavy portfolios.
Launched in 2020, the Pathbuilder range was created in response to rising demand for low-cost, globally diversified portfolios mapped to adviser risk profiles (1–4). The funds offer advisers a cost-efficient ‘passive’ solution with broad diversification at their core. Unlike traditional static asset allocations.
Fund performance since launch
- Pathbuilder 1 – the smallest fund in the range, with £37.2m AUM and the lowest risk profile, has delivered 13.93% growth since launch. Designed for more cautious clients, who prefer to have more money in bonds than equities, this performance is similar to many lower-risk peers.
- Pathbuilder 2 – the “Balanced” profile fund, now at £192.5m AUM, has achieved 29.40% growth since launch, outperforming the IA 20-60% Share Sector by 9.08%.
- Pathbuilder 3 – with £208m AUM and a higher risk profile, has returned 42.09% growth since launch, outperforming the IA 40-85% Share Sector by 10.52%
- Pathbuilder 4 – the largest fund at £244.7m AUM and the highest-risk option, has delivered 38.64% growth since launch – but is yet to hit its five-year anniversary, having launched a year later than the other profiles.
The Pathbuilder range is built on 7IM’s established Strategic Asset Allocation (SAA) framework, focused on maintaining low costs while allocating to the most liquid and cost-effective traditional assets. Last year, the funds incorporated a trend-following strategy up to 4% of each portfolio to provide additional diversification relative to the traditional asset classes within the SAA. Trend following aims to take advantage of trends in both rising and falling markets to make profits,
which can be helpful for the portfolio when other return seeking assets are not performing well.
With an annual management charge of just 0.22%, the funds are available via the 7IM Platform as well as a broad selection of other adviser platforms.
Shanti Keleman, Co-Chief Investment Officer at 7IM, said: “As we celebrate the fifth anniversary of our Pathbuilder funds, we’re proud to offer clients a range built to evolve with the investment environment. We’ve diversified into emerging markets and regions where inflation and commodities have a greater influence on returns. Despite being underweight in the US, the funds have delivered, leaving us well positioned as investors increasingly question whether the US will continue its decade-long dominance.”
“Volatile markets this year have put our funds to the test, but our focus on innovative diversification has helped them deliver. Access to deeper diversification has never been more important.”
“For us, ‘passive’ isn’t just about low cost, it’s about providing genuinely diversified portfolios guided by a disciplined strategic asset allocation. That means constructing something more robust than simply cap-weighted equities paired with government bonds. The evolution of Pathbuilder reflects our most up-to-date thinking on how best to deliver this.”
Chris Justham, Managing Director of Intermediary Solutions at 7IM said: “We’re always looking for ways to enhance our offering so planners can deliver the best outcomes for their clients. Pathbuilder provides a clear, straightforward range that brings deeper diversification to portfolios. We’ve been innovators in the passive space for 16 years, and we’re pleased to celebrate a range that is not only keeping pace with its peers but, in many cases, outperforming them.”
