Alternatives set for the mainstream
UK - Alternative investments such as hedge funds, private equity and commodities are set to become mainstream asset classes for pension funds over the next three years, according to a survey by Investment Solutions.
A majority of the 45 investment houses questioned said the pension fund demand for alternative products had grown significantly.
This suggested that before long, the asset classes would enter the mainstream arena, Investment Solutions noted.
The survey also confirmed that firms have been pushed to turn their focus to alternative assets. Responses showed 40% of managers planned to launch additional products in the space.
This will see the trend for high alpha and unconstrained equity strategies fade out, since less than 15% of firms were set to launch such products over the next three years.
Liability matching products for pension funds remained popular with 18% of respondents having new products in the pipeline.
Cara Macgregor, senior research analyst, Investment Solutions said: “There is clear demand from pension funds to allocate more towards alternative asset classes as trustees seek to diversify returns from their long term assets."
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