HSBC Alternative Investments (HSBC AI) has noted significant growth of interest in alternative investments as a means of diversifying a portfolio, to protect against volatility.
HSBC AI global head of portfolio management Faraz Sultan said that he is seeing a trend develop in the Australian market for exposure to alternative investments, in particular hedge funds.
Allocation of alternative investments in the Australian market have risen around 17 per cent in the last 12 months, and is expected to continue, he said.
"We have seen a significant increase in terms of the allocation. [Institutions] see alternative investments as a complement to their traditional allocations," Sultan told InvestorDaily.
The approach has changed from gearing from using an off-the-shelf product towards a more tailored approach, he said.
"[They] are looking for more transparency, more engagement - and they are obviously wanting to tailor their allocations to suit their own needs in terms of liquidity and strategy," Sultan said.
Clients are becoming increasingly interested in how to diversify away from the volatility and equity market risk that many investors have faced.
"There has been a learning curve. As these institutions have become more comfortable with the asset class and their allocations, they are happy to move to a more directed approach," Sultan said.
"I would also say, as allocations have increased, they are willing and able to take that approach. After 2008 and the need for better governance and more transparency, that's also driving things as well."
