Managed futures are emerging as a favorite among advisors hungry for a way to give their clients exposure to commodities, currencies, and other potentially high-return -- and low-correlated -- asset classes.
According to new research from Morningstar and Barron's, 12% of advisors say managed futures have been the biggest boon to their business over the last five years -- although long/short hedge fund exposure is making a strong entry with 10% of the survey population.
A full 70% of advisors say that over the next five years, traditional stocks and bonds will be less important -- or at best, equal in importance -- compared to hedge funds, commodities, managed futures, and other asset classes.
The usual factors were mentioned as motivators. Alternative asset classes add diversification and the prospect of better risk-adjusted returns, not to mention (in theory) absolute return potential. Perhaps amusingly to some of you, only 10% of the advisors say their clients nagged them to get the hottest exotic investment they read about.
REITs and emerging markets stocks are still considered "alternative" asset classes by about 8% of advisors; for the rest, these instruments are rapidly approaching mainstream status if they aren't already.
It's an interesting study worth skimming to get a sense of what advisors are doing and what the true range of asset classes and exotic vehicles out there really is.