In an environment of lower expected returns, investors are looking for new assets that can help them meet objectives. This has led many to turn to alternative investments.
There is a broad range of strategies that fall under the term “Alternatives” but this class look to provide key characteristics like equity-like returns and diversification. In this late market cycle, investors are generally expecting equity markets to deliver a return of CPI +5% p.a. – the typical objective of many absolute return funds.
Given this, multi-asset fund may be the preference for investors due to their:
- Greater transparency and simplicity
- Long only, liquid assets that play a versatile roles in portfolios.
- Focus on downside risk management, aiming to cushion drawdowns
- Typically lower volatility and conscious balance between aiming to meet the return objective and the risk the strategy takes.
- Fees being more competitive.
Adopting a flexible, outcome-oriented approach to asset allocation is an alternative “alternative” option.