Alternative strategies attract inflows
Investors have been exhibiting a liking for alternative strategies but need to thoroughly understand the accompanying risks, according to the latest sector research released by ratings house Standard & Poor’s.
The sector review of alternative strategies, Alternatives fixed income and alternative strategies — alternative futures peer groups, noted that commodity index and actively managed products had seen large inflows of funds under management in recent quarters.
The S&P analysis said the commodity theme appeared to be growing as investors considered various factors, including emerging market growth, currency devaluation and demand for real assets.
It said liquidity terms for all retail funds in the peer group had also improved, moving to daily pricing and redemption due to investor demand and the liquidity profile of underlying investments in futures and exchange-traded products.
However, S&P Funds Services analyst Michael Armitage cautioned that investors needed to be aware of the potential risks involved in investing in such products. He said relative value and direction macro investing presented significantly different return profiles that investors and their advisers should seek to understand.
The S&P sector review covered 12 funds with only three, the Blackrock Asset Allocation Alpha D and Alpha C funds and the Winton Global Alpha fund, warranting a top five-star rating.
AUTHOR
Mike Taylor
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