On the surface, it is a portfolio that invests in more than one (or multi) asset classes. But considering many funds do this anyway – with most portfolios holding some cash, or hedging currency risk, or using a derivatives overlay – what exactly sets these funds apart?

Unsurprisingly, there doesn’t seem to be one clear definition of multi-asset; there are multi-manager multi-asset funds, there are direct multi-asset funds, there are absolute return multi-asset funds and model portfolios and discretionary portfolios that all have a multi-asset mix in order to meet the client’s end goal.

So perhaps we should strip things back to basics and look simply at what the fund invests in. Does it invest in more than one asset class, and what is the exposure to those investments and the overall diversification of the portfolio?

Does the fund have a strong bias to UK equities and the remainder in fixed income, in which case, can this be considered a true multi-asset fund?

If it has 65 per cent of the fund in frontier market equities, 10 per cent in high yield bonds and 5 per cent each in commodities, hedge funds and infrastructure, this is definitely a multi-asset portfolio. But many would suggest it sits at the riskier end of the spectrum, with little or nothing in the way of traditional assets that could be considered potential risk protection.

The basic asset allocation may be a simple question to ask, but it is a good starting point. By knowing what it is invested in, you have a better chance of judging whether it will deliver what your client wants, be it income, capital growth or a bit of diversification.

But with the pensions reforms in April giving retirees the opportunity to invest their retirement fund as they wish, income – and in particular, income from a multi-asset portfolio – is likely to remain a key focus for the future.

As James de Sausmarez, director and head of investment trusts at Henderson Global Investors, points out: “With this pension change, a lot of advisers will put investors into multi-asset products. Others may just buy straight into investment trusts, for example, for a stable and growing income stream. But investment trusts are becoming more interesting for income investors, and demand is going to grow quite substantially as people come to terms with the pension rules and get a grip of it.”

With the demand for income growing, the need to look beyond the traditional and make use of the wide universe of asset classes has perhaps never been more important. Multi-asset in its various forms has been around for some time, but this may be the start of a new lease of life as a preferred income product for pensioners, if the multi-asset industry can grasp the opportunity.

Nyree Stewart is features editor at Investment Adviser

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This special report is sponsored by JP Morgan Asset Management. All editorial is independent.