Unique Accounting Challenges

Multi-asset investing is a strategy which requires some additional thought and planning when it comes to choosing an accounting system that is right for your business or family office. It involves combining different asset classes to improve performance and manage risk. Instead of purchasing individual funds that focus on a specific asset class, region, or sector, you can purchase individual multi-asset funds that contain a suitable mix of various assets. The objectives of multi-asset funds can be risk-oriented, and some fund providers offer a range of funds with varying levels of risk. In these funds, the lower-risk options will have a higher allocation to lower-risk assets such as cash and bonds, while the higher-risk options will have a higher allocation to assets such as equities.

 Before getting into the unique accounting issues presented by multi-asset investment portfolios, let’s take a look at some of the different asset classes that are out there, which investors invest in. 


Cash and cash equivalents are actual cash on hand as well as cash-like securities. This form of investment is considered low risk because there is little to no risk of losing money. Because of this peace of mind, returns are lower than in other asset types.

Cash and cash equivalents include cash in a savings account as well as Treasury bills (T-bills), guaranteed investment certificates (GICs), and money market funds issued by the United States government. In general, the higher the danger of losing money, the higher the potential reward.

Fixed Income

A fixed income investment is one that pays a fixed income. Essentially, you lend money to a company, and in exchange, they pay you a fixed amount until the maturity date, which is the date on which the money you initially invested (the loan) is returned to you.

The most prevalent types of fixed-income products are government and corporate bonds. The government or firm will pay you interest for the life of the loan, with rates varying according to inflation and the perceived risk of default. Because the risk of certain nations failing on their bonds is extremely low, they pay out less. In contrast, some businesses are in danger of going bankrupt and must offer investors more to persuade them to leave with their money.


When individuals talk about equities, they usually mean holding stock in a corporation. Companies frequently sell shares of ownership in exchange for cash to the general public in order to expand and accomplish their goals. Purchasing these shares is an excellent strategy to profit from a company’s success.

There are two ways to profit from investing in businesses:

  • If the corporation declares a dividend
  • If you sell the stock for a higher price than you purchased it for

However, the market might be turbulent. Share prices are known to vary, and some businesses may even fail.


Commodities are raw materials that can be converted into various commodities and services. Metals, energy resources, and agricultural products are a few examples.

Commodities are important to the economy and, in some situations, are regarded as a good inflation hedge. Their return is determined by supply and demand rather than profitability. Many investors engage in commodities indirectly by purchasing stock in firms that manufacture them. However, there is a sizable market for direct investment, whether it is buying a physical commodity with the intention of selling it for a profit or investing in futures.

Each asset type has a varied level of risk and return and performs differently in different environments.

Alt Asset Classes

The most liquid asset classes, and thus the most quoted asset types, are equities (stocks), bonds (fixed-income instruments), cash or marketable securities, and commodities.

Other asset classifications include real estate and valuable goods such as artwork, stamps, and other trade items. Alternative investments are also referred to by some experts as hedge funds, venture capital, crowdsourcing, or cryptocurrency. However, an asset’s illiquidity has nothing to do with its return potential; it just indicates that finding a buyer to convert the asset to cash may take longer.

Choosing an Accounting System to Properly Manage a Multi-Asset Portfolio

Alternative Asset Management involves managing portfolios that are more sophisticated and unique than those of other investment manager groups, such as family offices. Alternative assets differ from traditional assets and may have specific requirements that may or may not be supported by a software package. For example, cryptocurrencies use more decimal places than equities.

While most developers and software providers support most, if not all, asset classes, it is important to carefully examine their capabilities. There is a difference between simply supporting an asset class and specializing in it. This can mean the difference between having a placeholder field and workarounds, versus having robust reporting capabilities dedicated to that asset class. Each type of investment has unique features and functionalities that must be individually accounted for. If these are not properly addressed in the system, reporting can suffer. When an asset class has been carefully evaluated and the properties of each class are considered to ensure fair representation, the payoff comes in the form of accurate charting and reporting.

Multi-asset investing is a strategy which requires some additional thought and planning when it comes to choosing an accounting system that is right for your business or family office. It involves combining different asset classes to improve performance and manage risk.

Final Thoughts on Multi-Asset Accounting

Finally, when managing a multi-asset portfolio, it is critical to select a suitable accounting system that can effectively support and specialize in the various asset classes. Alternative asset management entails managing complicated and one-of-a-kind portfolios, and alternative assets may have particular needs that must be met by the software package. Accurate charting and reporting can be achieved by carefully examining the capabilities of software providers and ensuring that the specific characteristics and functionalities of each asset class are correctly accounted for. By adopting these procedures, investors may rest assured that their multi-asset portfolio is being handled effectively.


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