Alternative investments first began to really rise in popularity, and quickly enter the mainstream investment community shortly after the markets crashed in 2008-2009. To this day, they remain a popular choice for many financial advisers, investment institutions and private investors.
According to research conducted by Morningstar Inc., investors have been increasing their holdings in alternative investments; with investment figures reaching approximately $19.7 billion in 2012. The survey received responses from 235 institutions and 471 financial advisers in March 2013.
In addition to the steady rise in interest, the survey conducted by Morningstar also found that both advisers and financial institutions said they look to alternative assets primarily for diversification, in addition to low correlation and enhanced risk-adjusted returns. To add to this, 63 percent of advisers said they allocated somewhere between 6 percent and 20 percent of their clients’ portfolio investments to alternative investment offerings. 15 percent of advisers reported that they anticipated allocating more than 20 percent to alternative investments over the next five years.
Interestingly, both advisers and institutions said high fees were the top reason the would hesitate about investing in alternatives, followed by liquidity and transparency concerns. Thirty percent of advisers cited uncertain benefits as another cause for their apprehension, and 22 percent cited a lack of clarity on how alternatives fit into their investment portfolio.
The findings of this survey suggests that alternative assets is where investors should consider looking, particularly when considering their return on investment (ROI), and planning their long-term investment success.
Since the market is offering poor results on traditional investments such as stocks, bonds, real estate, etc, advisers are suggesting that clients should review investment alternatives, if they hope to receive a dependable investment return. Lastly, it seems that this trend will continue over the foreseeable future, and alternative assets are set to become a hot trend within the market.