Multi-assetAug 13 2015

Architas’ Rock ups exposure to alternative assets

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Architas’ Rock ups exposure to alternative assets

Architas chief investment officer Caspar Rock has ramped up his exposure to alternative assets in an attempt to diversify the firm’s portfolios.

Mr Rock, who co-manages the £770m multi-asset range, has invested between 10 to 15 per cent of the portfolios in alternatives.

He has been adding to these areas due to growing concerns about the lack of liquidity in the fixed income markets, he said.

Mr Rock added: “I’m genuinely concerned about the credit markets. I still hold bonds, because you have to hold bonds for diversification, but I don’t have a lot.”

Liquidity in the bond markets has increasingly become a major concern for investors. Trading in the sector has slowed as the inventory held by investment banks has dropped drastically since the financial crisis.

However, instead of buying more liquid products, Mr Rock has opted to buy alternative illiquid products.

He has opted for complex fixed income vehicles, such as floating-rate loans, and catastrophe and infrastructure bonds.

Mr Rock said: “The common theme between these products is they are less liquid and so are high-yielding assets.

“We are in a world of dull growth so we need to find opportunities within that framework.”

He said he was confident in holding a variety of these illiquid assets because they tend not to be correlated with each other.

Property has become another sector that is starting to make some investors nervous. Property transactions for the first quarter of this year fell by 13 per cent, the Nationwide house prices index showed.

However, Mr Rock said he liked the investment case for property and has been buying into funds invested in specialist properties such as NHS buildings, ground rents and student accommodations.

Elsewhere, Mr Rock said he had been avoiding a normal source of diversification: commodities.

“Commodities are only really a source of value if everyone else thinks they are,” he said.

Mr Rock does not hold any gold or gold-related equities in his portfolios. This has helped performance as gold-focused funds have taken a hammering with the cost of bullion hitting a five-year low earlier this year.

Mr Rock added that if the price of gold falls below $1,000 per ounce, a psychological barrier could be broken and the price could plummet further.

Gold has already almost halved in value since it hit its all-time high in September 2011 when it was $1,921 per ounce. At the beginning of last week it was trading at about $1.090 per ounce.