Alternative Investment  

A pivotal role for trusts in alternative asset allocation

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Investing in alternative assets

Such disparity among alternative asset classes is reflected in their fundraising. In its latest monthly report, Winterflood data shows more than 50 per cent of fundraising in the year to date to end-July has been in property and infrastructure products. Hedge funds accounted for just 1.2 per cent, while private equity was incorporated into the 1.9 per cent raised by a variety of ‘other’ vehicles.

In what has generally been a positive year for the closed-ended space, only five of the 16 investment trust sectors have seen discounts or premiums worsen so far in 2017, but hedge funds and private equity are two of them.

“While we believe that the sector still offers value plays, our preference is for best-in-class funds,” says Simon Elliott, research analyst at Winterflood.

“The vast majority of listed private equity funds have outperformed the FTSE All-Share index so far this year, but there is considerable variation in discounts, with 11 funds still trading on discounts of 10 per cent or wider.”

Seven of the 11 trusts in the hedge fund category have seen share price improvements so far in 2017, according to Winterflood, but the sector’s biggest names still operate on discounts that are above 12-month averages.

Taha Lokhandwala is deputy editor of Investment Adviser