The lesson of the last two years has been that over exposure to one strategy is vulnerable to failure when market conditions change. Conflicts of interest between pure fund managers and the operators of the underlying assets create potential disincentives to sell assets when liquidity is required by investors.
By including a controlled exposure to alternatives where there is no inherent conflict of interest and there is a robust regulatory framework, IFAs are able to better protect investors from macroeconomic risk. In today’s world of high speed multimedia options it also allows them to protect the integrity of a genuinely added value investment service.
There is now a rush in alternatives by institutions and pensions funds seeking yield. During the last decade previously alternative assets have evolved to “mainstream” status. A prime example is the student accommodation sector where so far in 2015 over £4bn has been invested in the UK by institutions and sovereign wealth funds.
