Alternative equity an alternative to cash
Alternative equity strategies are a viable transition for fearful cash investors, as they deliver reliable income streams and protect capital in volatile markets, according to Standard & Poor's (S&P).
Furthermore, the researcher continues to be impressed with equity income as a peer group, finding it to be under-appreciated as a potential core allocation for income-focused investors.
These are some of the main findings from S&P's alternative strategies - equity sector review, which found that any flows to the sector tend to favour managed futures and global macro managers, while equity remains unpopular.
Against an uncertain background, particularly in Europe, cash remains king for many retail investors.
"Still, our view is that some equity alternatives in the Australian market offer smarter exposure to the asset class," S&P analyst Jason Patton said.
The best managers display a record of delivering downside protection and alternative income streams, while beta variable managers who 'stick to their knitting' are highest rated.
While S&P continues to scrutinise managers' use of 'the short side', the researcher believes the flexibility of the formats covered allows skilled managers to protect from the downside while targeting reliable income streams.
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