Need for more diversity
Many diversified funds in Australia are too heavily weighted towards equity risk, according to the head of investments at Intech Investment Consultants, Daniel Needham.
Commenting on Intech’s recent performance with respect to global diversified investment strategies, Needham said the firm had invested significant resources over the last two years to alternative investments, and this was something it would continue to do.
The company had introduced six new alternative strategies to most of its Diversified Trusts in 2007, with three of these being skills-based alpha strategies and the other three being market-based beta strategies.
“At the time, changes were made to reduce the portfolios’ reliance on equities, property and bonds and to reduce the impact of extreme volatility,” Needham said.
“Many diversified funds in Australia are, in our view, too heavily weighted towards equity risk,” he said. “While there has been a move by many to allocate to alternatives, generally allocations have been too small.”
Needham said that in some cases, allocations made to hedge funds or funds of hedge funds had material underlying exposure to equity and debt markets, which clearly defeated the purpose.
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.