Financial advisers have acknowledged the relevance of alternate assets in the new economic environment, however, they were still uncertain about its implementation.
“The institutional market has recognised it and there’s been a significant increase in their use of alternatives in portfolios,” Ironbark Asset Management head of distribution, Alex Donald, told InvestorDaily.
“In the retail market, I think there’s a desire to do it but it hasn’t been broadly used,” he said.
“People want to use alternate assets but how that’s manifested in the retail space is that they are using macro and commodity trading advisor (CTA) funds as they are liquid, transparent and gave great returns during the global financial crisis.”
The reasons advisers had not taken up alternative assets were due to perceived complexity in the areas of liquidity, transparency and diversification, Mr Donald said.
“It’s a portfolio construction challenge, driven by researchers and gatekeepers, as planners are asking for ways they can articulate this to clients and understand alternate asset products,” he said.
Furthermore, as no single alternate asset strategy performed well in every market environment, allocations to the sector had to be diversified, Mr Donald said.
“The problem for the adviser is that if you want to be diversified, you’ve got to use three, four, five managers to implement over 300 or 400 clients that they only see once a year,” he said.
“How do you stay truly dynamic and diversified on your own and also, how do you do manager research? If you’re a planner that doesn’t have the expertise to build a complex alternate asset suite of products and keep it dynamic, you need to use a diversified product.”
Advisers were approaching Ironbark requesting a more diversified approach to alternative assets as well as education, he said.
