The world is currently struggling with uncertainties that heavily impact the financial markets. Pick any point in history though and you will likely find news of political or religious wars, new diseases, and financial instability. It’s for that reason that investors are increasingly expanding the type of investments they engage with, hence the rising popularity of the multi-asset broker.
In effect a multi-asset broker gives investors or traders a range of products that cover multiple assets, classes or investment types for the purpose of diversification. Usually this new breed of online broker will give this access through one account or shared wallet.
TRADE.com is one such broker that offers its traders a range of products including IPO access, CFDs through the web or MT4, DMA on over 100,000 assets through 120 global exchanges, Asset Management services and even Spread Betting for the UK and Ireland.
Here are the top 4 reasons that investors use a multi asset brokerage firm like TRADE.com
1. Diversification
The purpose of diversification through allocating funds across multiple trading types is to lower risk. If you are only exposed to one type of investment which suddenly topples, then you stand to lose all of your capital. However if you have your funds allocated in a variety of models then you can weather the storm easier, by gaining on some investments even as others decline.
2. Hedging
Preserving your wealth in times of negative equity can be just as key as actually building your wealth. In uncertain times wealth preservation becomes the ultimate strategy. Hedging is a risk management strategy that is important to understand. For instance if your portfolio is mainly based on UK based assets like stocks and GBP and you believe that Brexit may knock down the confidence or price of these assets, then you may want to use other classes to hedge against these positions. Examples might be futures or options. This may bring down your profit potential, in hedging against yourself, but it also might keep you in the game through the instability.
3. Tactical asset allocation
In order to make the most of different asset types at different times you will need to have access to as many different kinds of assets and markets as possible so you may tactically balance your portfolio. Investing with a multi asset broker is the way to get access to as many asset classes and investment vehicles as possible from one place.
4. Margin
Many investors like to leverage their limited capital in order to realise larger gains. It is through working with multi asset brokers that you can gain access to margin trading. TRADE.com for instance offers its investors access to 30 times leverage through CFDs and this goes up to 200 times for professional traders. It is worth remembering of course that while leverage can increase reward, it also multiplies risk.
TRADE.com multi-asset brokerage example offering
We look at TRADE.com as a specific example of a broker that offers a variety of asset classes and vehicles. This is a good example because it has grouped together a range of investment types that typically investors would not find under one roof. Commonly investors would have to have a variety of accounts with different financial institutions to get this level of access. With the TRADE.com account, as an example of the new breed of broker gives you the ability to invest in high growth startups prior to their IPO. Simultaneously you can allocate funds through their DMA service, you can trade CFDs and invest in Thematic portfolios.
If you are interested in learning more about multi asset investing then it is well worth talking to a broker to find out how you can take advantage of diversification, hedging, tactical asset allocation and margin trading.
Risk warning
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.40% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
The value of your investments can fall as well as rise, which could mean getting back less than you originally put in. Past performance may not be indicative of future results. All trading involves risk. Options and Warrants are complex financial instruments and are not suitable for all investors.
The Company provides no investment advice of any kind, nor gives advice or offers any opinion with respect to the nature, potential value or suitability of any particular securities transaction or investment strategy. Professional clients can lose more than they deposit.