Recent market volatility has reinforced the need for investors to incorporate alternative investment strategies into their portfolios if risk is to be managed, says Man AHL.
Sandy Rattray, Man AHL chief executive, said alternatives diversify a portfolio and in turn, can mitigate the risks associated with market downturns.
“The recent market downturn has been a reminder to investors of a lesson that we learnt all too well during the global financial crisis – to protect investments during downturns, investors need to consider more than just a portfolio consisting of equities and bonds.
“Alternatives can often deliver low correlation with traditional assets, potentially providing diversification benefits and improved portfolio efficiency.
“Trend-following strategies, in particular, have the capability to benefit from falling prices, which can help defend investment portfolios during market disruptions,” Mr Rattray said.
Mr Rattray said investors’ interest in alternatives is increasing as many seek ways of earning money in relatively slow growth environments.
Hersh Gandhi, Man Group managing director, Asia Pacific, pointed out that quantitative investing is also gaining traction.
“When investors previously talked about quantitative investing, they often referred to it as ‘black box’ investing and didn’t really understand what it was or how it worked.
“Beyond diversification benefits, investors are also realising the benefits of alternatives to capitalise on any market opportunity to improve performance potential and consistency,” Mr Gandhi said.