Investors are increasingly looking to alternatives in the effort to secure above inflation returns in a low-growth world, says Perpetual.
The average global cash rate is sitting at 0.5 per cent, down from 4.5 per cent in 2007, making the current investment environment particularly difficult to extract returns, said Perpetual head of investment strategy Matt Sherwood.
“In this environment investors need to move away from the benchmark and focus on investment opportunities.
“This is the very definition of real return investing,” Mr Sherwood said.
At a recent Perpetual event – Tapping into the World’s Capital – global investment managers noted the rising popularity of alternatives, both locally and across offshore markets.
Perpetual acting general manager of regulated fiduciary services, Rupert Smoker, said the hedge fund industry is growing in popularity.
“The hedge fund industry has doubled since the global financial crisis and in 2014 we saw more flows into hedge funds than in any year since 2008,” Mr Smoker said.
“Local investors are looking to increase their allocations to multi-asset strategies that perform in good and difficult market conditions.
“While global investment managers recognise our mature market and are looking for the right partners to tap into this investor demand,” said Mr Smoker.
While Australian investment managers are looking to global markets, global fund managers have also been entering the Australian market at an escalated rate.
European investors’ appetite for Asia-Pacific investment has been growing – a quarter of all offshore investment is directed toward the region.
Latin American allocation to Australia, however, is less than one per cent of assets under management.
Consensus among global investment specialists, according to Perpetual, is that there is an opportunity for local managers to attract further capital from overseas.
The Asia Funds Passport is important in making cross-border investment more seamless and attractive.
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