A multi-asset brokerage is a brokerage firm that gives investors and traders access to a variety of different asset classes. This ranges from bonds to commodities, stocks, ETFs and derivatives.
Having access to a wide range of assets is important as it allows investors to diversify their holdings and it gives a broader range of opportunities to traders. Some asset classes are more volatile than others, which means that you can pick and choose which asset classes to invest in depending on your desired level of risk.
An example of a multi-asset brokerage is TRADE.com, as it provides traders with access to everything from stocks to derivatives, forex, commodities, bonds and ETFs. It also offers newer products like access to IPOs before they go public, Thematic Portfolios and Spread Betting. This is a respected broker that is well-regulated. It allows for fast execution of trades and there is plenty of liquidity on offer across the range of asset classes.
What is multi-asset investing?
Multi-asset investing is a process of investing across a wide range of different asset classes. This spreads your risk across the board, as you are not putting all of your eggs into the basket of a single asset class. For example, if the stock markets are taking a proper beating and an investor has all of their funds tied up in equities, then their fate is tied to the future direction of these markets.
In contrast, if an investor has spread their invested money across different asset classes such as stocks, bonds and commodities, they will have a lot less exposure or expected loss if one of these asset classes tanks.
For example, oftentimes when there is economic uncertainty and stock markets fall, the likes of bonds and precious metals such as gold perform better. This will spread your risk and allow your portfolio to be more diversified.
Is your broker really a multi-asset brokerage?
While a lot of brokers claim that they are a multi-asset brokerage, many of them are not in reality. They may advertise a variety of different asset classes that can be invested in but the availability of liquidity and the execution speeds will have the final say in this matter.
If you cannot fill your orders due to poor liquidity or the execution speeds are too low, then a broker cannot be defined as a multi-asset brokerage. An investor has to be able to actually execute trades quickly and efficiently in order to be able to properly partake in multi-asset investing. You need to check the levels of volumes that will be available across the various asset classes advertised by a broker.
This is why you need to be investing with an established broker that provides full transparency. This will help you to get instant execution and get a true grasp of the exact trading costs that exist in reality.
What are the benefits of multi-asset trading?
There are a number of key benefits associated with multi-asset trading. The main advantage is that traders have a much wider range of investment opportunities. If a given asset class has been in a lull and there is not much movement, then traders may struggle to make many gains.
If they have the option to transfer their focus over to a more volatile asset class without having to change brokerage, then this will help to boost the number of potential trading opportunities. You can also help to manage your risk level is a lot more by hedging across different asset classes, which allows for much better risk management.
Multi-asset trading is more complex than run of the mill trading, so it is better suited to more experienced traders. However, these traders may be able to capitalize a lot quicker on changing markets.
Direct Market Access (DMA) is another staple for multi-asset trading, something which TRADE.com offers to its traders. Traders on the platform can place buy and sell orders directly on global exchanges for asset classes like ETFs, futures and options using one single account. They can get the best price execution possible and access more than 100,000 assets across 125 global markets.
