Such is the interest in alternatives that in November we are running a similar event for a Channel Islands audience with three new speakers and two new topics, private equity being the only common topic across the two.
What is interesting is that ‘alternatives investing’ also include different ways of running mainstream asset classes. For example, one of the speakers at the London event was Stephen Jones, joint head of fixed income at Kames Capital – so, on the face of it, nothing too alternative there. The same with Joanne Warner, First State’s head of global resources, and BlackRock’s Thomas Holl, another natural resources specialist, as a long only global resources equity fund is possibly not the most ‘alternative’ of investment choices.
Yet investors do see both of them as alternative uses of mainstream bond and equity investments with, respectively, each providing a very specific hedge against inflation and giving an exposure to gold and other commodities.
One debate is whether or not long only equity funds investing in a specific sector will be anything other than correlated to equities, with long/short giving more genuinely alternative routes to the same markets.
However, even this argument falls by the wayside if research from ML Capital Management is to be believed.
In the latest in a series of quarterly surveys the investment manager caries out into alternative Ucits strategies, the main conclusion was that in the alternative investment space, long/short equity strategies are falling out of favour.
Instead, global macro and CTA strategies are the ones investors are looking to.
Commenting on the latest survey, John Lowry, co-founder and chairman of ML Capital, said: “The latest barometer [survey] results confirm a rapidly growing demand for well managed alternative investments that offer a strong element of protection on the downside. However investors recognise that there is a real need for a wider range of experienced hedge fund managers to enter the Ucits market, in order to broaden the choice of strategies.”
Whether or not this last statement is true, I’m not sure, as there are plenty of capable managers already operating in the Ucits world, but what all this does point out is that investors have to be careful when they talk about ‘alternative’ investing.
‘Alternatives’ used to be anything other than equities, bonds, property and cash but now we are running alternative events when equities and bonds are included; property is now seen as genuinely alternative; and cash is a loser in real terms when inflation is the best part of 5% higher than inflation.
As ever, an investor’s emphasis should be on the outcome of any investment strategy not what they call what goes into their portfolio.
