63 per cent of financial advisors in the UK are planning on investing more in multi-asset funds, according to new research by Netherlands-headquartered NN Investment Partners.

Three in five UK financial advisors are looking to boost clients' exposure to multi-asset funds over the next three years, according to NN Investment Partners.

Over a third of those surveyed cited automatic diversification as the key driver of multi-asset funds' appeal, while nearly half predicted a surge in demand for mult-asset funds managed on an absolute return basis over the next three years.

However, two in five flagged up a need for innovation among multi-asset funds so as to satisfy the full spectrum of investor risk profiles and investment appetites.

“Many UK financial advisors increasingly appreciate the benefits of delegating strategic and tactical investment decisions to managers with the resources to navigate today’s increasingly complex and globalised markets,” said NN Investment Partners' head of strategy for multi-asset, Valentijn van Nieuwenhuijzen.

“Just managing the asset allocation is not enough, however: it is crucial that this is done with a close eye on risk allocation too in order to deliver the absolute returns that are clearly important to investors and their advisors,” he added.

The research echoes similar findings by Baring Asset Management last month and brings multi-asset products further into the spotlight as investors seek lower risk exposure through diversification, as opposed to an equity-only portfolio.

Asset manager NN Investment Partners based its research on a survey of 94 financial advisors in the UK.