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

 

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.

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