Alternatives

For decades, advisers have relied on bonds as the go-to counterweight in a balanced portfolio. But as the correlation between bonds and equities turned positive in 2022–2023, shock ensued; and many investors are rethinking what they thought was a truism.

As the investment landscape evolves, the role of alternative investments remains a topic of debate. Some argue that traditional asset classes – shares and fixed income – are sufficient to build a well-diversified portfolio, while others see alternatives as essential for achieving uncorrelated returns and risk-adjusted growth. Here, we explore both perspectives.

Often you will speak to a fund manager that will talk about its specialist approach, the market niche that it understands well and can leverage, and how the expertise of its team is a differentiator. It’s rarer, however, to see that manager make an investment that exemplifies all of the talk.

Atchison’s framework for the implementation and effective management of alternative investments involves, before anything else, the careful assessment and categorisation of asset liquidity levels.

Without appreciating or accounting for nuances in the multitude of modern day investment types, opportunities are missed for optimal portfolio management according to Invesco’s Ashley O’Connor.

The democratisation of alternative assets into retail markets is nothing new, but the fact that it is accelerating brings into focus the risks that are now being acknowledged by investment management teams.

The contemporary notion of senior secured loans needs to be updated to reflect some of the inherent characteristics that make it one of the fastest growing asset classes in markets.

Natural catastrophe reinsurance and music royalties have been big winners for PG3, the family office of the founders of Partners Group, which is now bringing its “highly differentiated” uncorrelated strategy to Australian investors.

There’s around 15,000 hedge funds in the world – but how many of them are really hedge funds? When you’re looking for non- or less-correlated returns, it might pay to stay away from a long bias.

Born out of a government program, the Specialist Disability Income sector has expanded into a robust private market investment opportunity for those with the expertise to navigate its unique characteristics.

The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.

Asset managers have quickly ascertained the region’s growing appetite for alternative investments will not abate any time soon, but liquidity and gate provisions will need to improve.