The alternatives market has been popular over the past year as rock-bottom interest rates pushed investors into looking outside fixed income for diversification, and it still has some fire left according to Kames Capital’s senior multi-asset investment specialist, Nick Edwardson.
While some parts of the market look “more fully valued” than they have previously, Edwardson said the backdrop for alternatives means they remain a strong option.
“Contractually-backed cashflows, high initial yields, growing dividends and low correlations with other classes are likely to ensure that alternatives remain an important part of a total return multi-asset solution,” he said.
The opportunity for specialist income investments in the UK has only grown over the last five years as new funds have launched and existing funds looked to the sector to raise capital, Edwardson added.
He said: “There also continues to be demand from both the specialist income funds themselves for additional capital that they can deploy into available investment opportunities, and from investors who are seeking access to the attractive income streams that these funds provide.”
He dismissed both rising interest rates and shifts in government policy were not currently issues he predicted affecting demand for alternative products, instead he sees growing demand for the sector as a positive and supportive push going forward.
