Talking Point  

Investing in alternatives

  • Identify types of alternative investments
  • Explain advantages of alternative investments
  • Explain disadvantages of alternative investments
CPD
Approx.30min
Investing in alternatives
Should advisers turn to alternative assets to balance and diversify their portfolio?
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A feature of the decade long bull market that ran from the end of the global financial crisis to the start of the Covid-19 emergency was a rise in the proliferation and popularity of products that invest in assets other than bonds and cash.

The first wave of these mandates included absolute return funds, which promised a “positive return in all market conditions”.

The popularity of these strategies was such that one of the pioneers of the such strategies, the Standard Life Global Absolute Return (Gars) fund became the largest retail fund in the UK market.  

But the assets held in such funds have dwindled in recent years alongside the performance. 

Despite this, some investment experts say, while the sector as a whole has struggled in recent years, the better funds in the sector have delivered returns that are not correlated with the wider market. 

So, should advisers turn to alternative assets to balance and diversify their portfolio?

The report, which can be read by clicking the link in the image above, qualifies for an indicative 30 minutes' worth of CPD.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. True or false. Data compiled by the Interactive Investor platform found that only nine of the 118 Absolute Return funds in the UK market delivered a positive return during the sharp Covid-19 inspired sell-off in March.

  2. According to Mike Coop what should be the first task when assessing the role of alternatives in a portfolio?

  3. What is the main danger with less liquid investments?

  4. Pick the odd one out. Why is Nick Watson keen on alternative income assets?

  5. True or false, many investment professionals view gold as a hedge against sharply rising inflation.

  6. Why is forestry an example of an attractive asset class?

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You have successfully answered all the questions correctly, well done!

You should now know…

  • Identify types of alternative investments
  • Explain advantages of alternative investments
  • Explain disadvantages of alternative investments

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