Talking Point  

Advisers unlikely to turn to alternatives

Advisers unlikely to turn to alternatives

Advisers are reluctant to increase their exposure to alternative investments in the current market conditions, according to the latest FTAdviser talking point poll. 

The poll asked: “Do you expect to increase your allocation to alternative assets as a result of the recent sharp falls in equity markets?”

The data shows advisers generally resistant to this idea, with 44 per cent not likely to increase their allocation, compared with a third who intend to do so.

Alternative assets covers a wide range of products, ranging from absolute return funds and gold, to niche property funds such as those that invest in student property and healthcare centres.

Bill Dinning, chief investment officer at Waverton is “neutral” on equities, that is, he has the same weight in portfolios as the market as a whole, but keen on alternative assets as an alternative to the bond allocation he typically places in portfolios.

He said: “With fixed income unattractive we believe alternatives have an important role to play in diversified portfolios.

"That role is two fold: first, Absolute Return strategies can give exposure to an uncorrelated stream of returns giving diversification benefits.

"This sector has struggled in recent years but well-run funds have attractive volatility dampening characteristics.

"Second, real assets such as property (both physical and intellectual), infrastructure (including transportation), commodities (such as gold) and other investments underpinned by physical assets offer a combination of income and capital return that is attractive.

"Many of the assets that produce income have inflation-linked cashflows.”

James Sullivan, multi-asset fund manager at Miton Optimal, said he tends to avoid most alternatives other than gold, as he believes the performance of such investments is “not consistent enough".