• Home
  • Equities
    • UK
    • Global
    • Europe
    • US
    • Asia
    • Emerging markets
    • Specialist
  • Bonds
  • Multi-asset
    • Managed funds
    • Property
    • Commodities
    • Alternatives
    • Absolute Return
  • Markets
    • UK
    • Global
    • Economics
    • Currencies
  • Funds
    • Unit trusts/OEICs
    • Investment Trusts
    • VCTs/EIS
    • Platforms
    • ETFs
    • Pensions
  • Regulation
  • Diversity
  • People moves
  • Events
  • Financial library
  • Industry blogs
  • Thematics spotlight
  • Investment Europe
  • Newsletters
  • Sign in
    • logged-in-corporate-menuYou are currently accessing Investment Week via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0) 1858 438800

      Email: [email protected]

      • Sign in
     
      • Account details
      • Newsletters
      • Contact support
      • Sign out
     
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
    • Facebook
    • YouTube
    • Instagram
  • Register
  • Events
    • Upcoming events
      event logo
      Multi Asset Roadshow 2020

      Professional Adviser is back in the new year with the Multi Asset Roadshow, travelling to Harrogate, Warrington, Birmingham, Bristol and London.

      • Date: 28 Jan 2020
      • Harrogate, Warrington, Birmingham, Bristol, London
      event logo
      Investment Week Select

      Your time. Your Choice. Tuesday 4th February 2020

      • Date: 04 Feb 2020
      • Meet in Place, London
      event logo
      Professional Adviser Awards 2020

      The Professional Adviser Awards recognise excellence in Financial Advice. The 2020 awards will be held at The Brewery on Thursday 6th February.

      • Date: 06 Feb 2020
      • The Brewery, 52 Chiswell Street, London EC1Y 4SD, London
      event logo
      Women in Investment Festival 2020

      Investment Week, Professional Adviser, Professional Pensions, Retirement Planner and Investment Europe have collaborated to launch the Women in Investment Festival 2020, in partnership with HSBC Global Asset Management.

      • Date: 03 Mar 2020
      • The Brewery 52 Chiswell Street London EC1Y 4SD, London
      View all events
      Follow our events

      Sign up to receive email alerts about our events

      Sign up

  • White papers
    • Fidelity logo whitebackground1200 630px 1 120x194
      The ETF Evolution

      In this exclusive magazine exploring the evolution of quality and income ETF strategies, King reveals that each ETF follows an investment strategy developed by the group's in-house research team that leverages fundamental active insights to inform the factor definitions and applies portfolio construction principles to mitigate the unintended biases.

      Download
      7ded04ac5957a69da8d1df41c8f21a0c33988d8f 1 120x194
      A bet on the UK bounce back

      David Cumming, Aviva Investors' chief investment officer for equities, last year witnessed turbulent times for UK equities but he remains positive about the market in which he has a personal as well as a professional stake.

      Download
      Find white papers
      Search by title or subject area
      View all white papers
  • Industry blogs
  • Thematics spotlight
  • Investment Europe
Investment Week
Investment Week
Sponsored by BMO
  • Home
  • Equities
  • Bonds
  • Multi-asset
  • Markets
  • Funds
  • Regulation
  • Diversity
  • People moves
  • logged-in-corporate-menuYou are currently accessing Investment Week via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0) 1858 438800

    Email: [email protected]

    • Sign in
 
    • Account details
    • Newsletters
    • Contact support
    • Sign out
 
  • Trending
  • Investec OEIC launch
  • HL legal claim
  • GAM jobs risk
  • Tomorrow's world
  • Multi-asset

The rise of the 'new' multi-asset alternatives

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Share on Whatsapp
  • Send to  
0 Comments

Partner Insight: As yields have compressed and forward-looking return expectations fall, multi-asset managers have sought alternatives to traditional asset classes to find new sources of income and boost returns

Driven by the search for income in a prolonged low return environment, the growth of alternatives has continued at a faster pace over the past two decades. Demand for these assets is expected to rise to a staggering US$ 13.6tn by 2020* as investors hunt for uncorrelated sources of return outside of equity and bond sectors.

"The opportunity set within the alternatives sector is truly global and spans a diverse range of often quite specialised sectors. Today this includes private equity, infrastructure, hedge funds, private credit, insurance-linked securities and pharmaceutical royalties to name a few. Yet it wasn't that long ago that these types of alternative investments were the exclusive domain of institutional or specialist investors only," notes Michael Howard, Head of Alternative Investments at Prudential Portfolio Management Group (PPMG). "Newer alternative assets are often idiosyncratic in nature and uncorrelated with both traditional asset classes. Therefore, it is no surprise that they are being accessed much more widely than before."

Alternative substitute

Private equity is one area Howard and his team has invested in significantly over the past decade. The growth of this asset class has been driven by a number of factors. He explains: "More than 6,000 companies were listed in the US in 2000; today that figure is less than 4,000. The reason for that shrinking figure is that IPOs have dried up and when companies are choosing to list they are coming to the market with a much larger capitalisation than average." Effectively the growth period and when higher returns are on offer is all happening at a much earlier stage and predominantly via private capital.

"You can see that quite clearly when you compare the investment return multiples since IPO for Amazon versus Google and Facebook; the latter two were much lower as the growth phase had been enjoyed by private equity groups."

While alternative assets are useful in providing sources of uncorrelated portfolio returns, in other cases, like private equity for example, returns may have a higher correlation to public markets.

Though private equity investments will be investing in different companies with varied outlooks, they are essentially affected by the same thing as publicly listed companies: the economic cycle. Of course, what you do get by investing in private equity is an enhanced return and that is a good reason to consider it over other equity investments in a multi-asset portfolio. Crucially, these enhanced returns are delivered net of fees.

Click here to read the full article in an exclusive Multi-Asset magazine which reveals how pharmaceutical royalists and insurance-linked securities are taking over from traditional alternatives such as property as investors seek higher returns.

Advertisement

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Share on Whatsapp
  • Send to  
  • Topics
  • Multi-asset
  • Partner Insight
  • Prudential Portfolio Management Group
  • Industry Voice
blog comments powered by Disqus
Back to Top
Trustpilot

 

  • Contact us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters
  • Facebook
  • YouTube
  • Instagram

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017