Advisors Leaping Into Hedge Funds And Other Alternative Asset Classes For Their Clients

Thursday, January 20, 2011 02:17
edit
Advisors Leaping Into Hedge Funds And Other Alternative Asset Classes For Their Clients

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.

This Website Is For Financial Professionals Only


 

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.

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy