Alternatives Expected to Comprise 14% of Mutual Fund Assets

Asset managers around the world, who handle both institutional and retail accounts, have been increasingly focused on alternative assets. In fact, it was recently reported (Cerulli Associates) that between 8 and 10 life insurers said that they were actively considering increasing their allocation of assets toward alternative strategies, as they look for dependable sources of additional yield. Moreover, in the October 2013 report from Cerulli Associates, the data suggested that alternative mutual funds can be expected to comprise approximately 14 percent of all mutual fund assets, in the coming decade.

Since the financial crisis of 2008, institutions and advisers have been under immense pressure to increase returns while keeping exposure to risk unchanged or at least held at a minimum. As a result of this increasing pressure, many have shifted their focus the alternative assets that have been steadily attracting interest from retail and institutional investors seeking portfolio diversification, enhanced returns and (of course) manageable risk. In addition, the report's extensive research reveals that more than 50 percent of surveyed asset managers suggested that alternative investments are either more important than other initiatives or the most important initiative, both within the retail and institutional environment. Moreover, 60 per cent of managers have said the same ingredients will be followed for the portfolios of their high net worth clients, as well.

Most of the international investment community has taken notice of the fact that alternative investments have been growing in popularity exponentially over the course of the last couple of years. As a result of the increase in demand, the value of many alternative assets has been increasing steadily as well. Investors have noticed this too, especially when alternatives are compared to the S&P 500. This is especially appealing to investment-seekers, as they look for opportunities that will protect their investment principle and beat rising inflation, as well as address the skyrocketing cost of living.