Institutional investment manager QIC has attracted $200 million in commitments from its smaller clients for its Alternative Beta Fund, of which $150 million has been invested, since the launch of the fund last year.
"We invest into a range of alternative asset classes, including timber, commodities, insurance-linked securities, and we have bundled these together. It is fine for entities like sovereigns to get them individually, but that is not possible for smaller clients," QIC Strategy head of alternative investments James Dick said.
The fund was launched on 15 December 2010, but QIC has been operating the strategy for several years.
"We've invested in these asset classes for five years for our sovereign investor," Dick said.
He said the fund was established on the back of demand from clients who were searching for investments that had little correlation to equities, but he pointed out the strategy should not replace traditional asset classes, such as bonds and equities.
"We are looking for non-correlated sources of return, but QIC wouldn't say that you shouldn't invest in traditional asset classes as well," he said.
"Your return stream should be coming from traditional asset classes, but equities do let you down from time to time. By combining your traditional assets with these alternative asset classes, it will help you overall."
The fund should be considered an illiquid investment, he said.
"At QIC we just pass on whatever liquidity we get and for some asset classes it can take up to a few years to redeem," he said.
This is also one of the reasons the fund has not been fully invested yet.
"We deliberately ease into it; we don't want to push it so that it's fully invested on day one," Dick said.
