Alternatives

You don’t need the world to end to start investing in stressed and distressed debt, according to RBC BlueBay, but it helps. And what looks to be a multi-year uptick in defaults is creating plenty of opportunities.

Atchison Consultants weighs up the three-year performance of five top ranked managed funds in the growth subset of the increasingly in-demand alternatives sector.

In this column we take a closer look at the best performing funds in some of the most popular asset classes, with the aim of providing insight and support for those seeking to build more resilient portfolios. This week, we take a closer look at liquid alternatives.

A recalibration of dislocated markets is inevitable, according to Atrium’s Glen Foster, and the landing may not be a soft one. This presents an opportunity for investment teams that are prepared for a range of outcomes.

For capital allocators concerned about exposing their clients to too much risk in real estate debt, specialists say asset discernment and due diligence are key to protecting investments in a rapidly growing sector.

Track record is vital, but a lack of comprehensive and independent research is often forcing investment teams to do their own due diligence when it comes to alternative managers.

“Volatility is the most persistent diversifier,” says Atlantic House Australian head Andrew Lakeman. “People are starting to realise that, as well as realising that diversity of assets in a portfolio – with different names – does not necessarily mean that you are diversified.”

In this head-to-head battle, Atchison Consultants analyst Mishan Dahia pitches Magellan and Clearbridge against each other in an infrastructure performance match up. Which one leads, and which one lags?

Bonds and equities are suddenly firm friends, but this is far from the first time they’ve positively correlated. And it’s not the only reason liquid alternative investments are being brought into focus as a non-correlated diversifier, managers believe.

As the world turns towards critical minerals like lithium to power electric vehicles, alternative access to investment in these sectors will become crucial pieces of the supply chain puzzle.

The prevailing market dynamic has changed, with inflation fanning volatility and bonds no longer providing diversification ballast against equities. Active managers that have been employing alternatives for years are well placed to accommodate the new paradigm.

Australians have an “amazing love affair” with property, but many are limited in their investment exposure. At AIA’s recent annual conference, investors heard how three alternatives to direct ownership provide portfolio benefits with less hassle, particularly for income-seeking retirees.