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December 12, 2011 at 10:41 AM
Alternative investments are grabbing financial advisors’ interest as a means to achieve portfolio goals. Where they are looking for AI may be surprising, because the biggest firms are not necessarily getting all the attention.
A report from Cogent Research finds that advisors seeking out AI are looking at multistrategy and managed futures as offering the most potential in the next year. It also says advisors will show less interest in long/short interest or market-neutral strategies in the year to come.
The report, 2011 Alternative Investment Trends, says asset managers hoping to attract advisors will have to use specific segment and channel strategies to get their attention. Providers of managed futures, for example, would be more likely to see even greater demand among sellers who are the heaviest users of alternatives, having more than 15% of AUM in AI, as well as national wirehouse advisors; among this group, more than 4 out of 10 already use AI and are expected to make even more use of this strategy.
Alternatives are gaining in popularity among advisors, says the report, reflecting industry trends. But rather than relying on a few more mainstream suppliers for their options, as they do with more conventional asset classes, advisors instead are venturing farther afield in search of AI. The report cites traditional mutual fund, ETF, hedge fund managers, and other AI specialists as go-to sources for advisors.
