The trade-off is giving up some of the upside for more predictable returns. Michael Blayney, investment consultant at Watson Wyatt says one attraction such a manager might offer is an exposure to a range of diverse assets while avoiding the time consuming governance issues of investing directly. “You can buy something that is effectively pre-packaged, and it gets you the exposures you want without having to go through the process of buying and managing each one,” he says. “It is a way of getting exposure quickly to a lot of different risk premiums.”

Doyle warns that super funds trying to invest in alternatives themselves might not be getting the solutions they are after. “A lot of the alternatives are unlisted, so the true volatility is unknown. The multi-asset managers regularly mark to market,” he says. Multi-asset managers say that they have an advantage over CIOs trying to construct such a portfolio themselves because they have the flexibility and agility to shift positions, can apply leverage to different strategies, and traverse the entire spectrum of asset classes. “Nothing is off limits,” Doyle says.

He adds that the CIO should be agnostic to the positions its multi-asset managers hold, and not try account for them in other parts of the portfolio. A multi-asset manager could take a slice of the alternatives bucket and be a 5 per cent to 10 per cent holding in a large fund, he says. But the portfolio is transparent. “The CIO could look at the way we are invested, and it might help them. We are happy to talk to all our clients about the theory behind why we are taking certain positions.”

But Lill says that super funds may want to spread the manager risk by hiring a number of multi-asset managers. “It is can be dangerous to invest with a manger that only considers its own assets. It is easy to overlook the risk inherent in one’s own products,” he says.

Chris Condon, chief investment officer at MLC, agrees. Condon runs the MLC Long Term Absolute Return fund, a multi-manager fund with a similar target for inflation-adjusted returns. “We decide to go with managers based on whether we think they are excellent investors, not whether we own them or not,” he says.

Lill says that theoretically there is no reason why a multi-asset approach couldn’t go across an entire fund’s portfolio. “Most large super funds would hesitate to go over 5 per cent, and part of that is peer risk,” he says. “The funds are reluctant to be the first mover with new concepts like this.” It has been reported that some pension funds in the US have awarded up to 90 per cent of their portfolios to a small number of multi-asset managers. But Simon Eagleton, principle at Mercer Investment Consulting, says hiring only multi-asset managers would require a shift in tolerance for high fees and illiquidity, which is unlikely to happen any time soon in superannuation.