CFS’ alternatives hit $1.1 billion

Amid investors seeking non-traditional alternative investments for diversification, Colonial First State's (CFS) FirstChoice Alternatives portfolio has hit $150 million funds under management (FUM).

The FirstChoice Alternatives portfolio formed part of the fund manager's broader $1.1 billion in alternatives, CFS said.

Colonial First State's head of investments, Scott Tully, said investors were attracted to their alternatives as they provided equity like returns with less volatility and less correlation to equity markets.

"Alternatives typically generate a greater proportion of their return from ‘skill' than simply market returns, which is important to investors concerned about the prospect of lower returns from equities," Tully said.

Because of that, advisers were recommending a greater portion of their clients portfolio's to alternatives, he said.

CFS' alternatives portfolio manager, Guneet Rana, said further additions were being made to the portfolio. For example, a London-based discretionary macro manager, H₂0  Asset Management was added as the fund's seventh investment manager.

"Discretionary macro managers bring diversification benefits with their returns not only lowly correlated to equity and bond markets but also across macro managers," Rana said.

"The addition of H₂0 is expected to improve the risk return profile of the portfolio," she said.

H2 o was partly owned by Natix Global Asset Management which had A$14.4 billion in FUM.

CFS' FirstChoice Alternatives portfolio was launched in 2014 and aimed to generate a before fee return of the Reserve Bank of Australia's cash rate, plus four per cent.