PA ANALYSIS: Some alternatives are more equal than others

Investment companies have raised £3.9bn in this year-to-date, already more than any full calendar year in history, the Association of Investment Companies said on Wednesday.

PA ANALYSIS: Some alternatives are more equal than others

The sector’s fund raising activities were, of course, given a significant boost by the listing of the Woodford Patient Capital Trust, but the much of the heavy lifting has been done in the alternative sector.

As AIC communications director, Annabel Brodie-Smith, explained: “Despite the August volatility, investment company ratings are to date relatively unmoved, with record-breaking demand clearly offsetting what has been a more challenging time for markets.  It is the specialist, higher yielding sectors which continue to raise the most money and attract the highest ratings.”

And it is not just in the investment trust space that alternatives have been growing in stature. In the open-ended space investor demand for alternative strategies continues to grow and an increasing number of asset managers are looking to get in on the action. Just this week, BlackRock announced the launch of an event driven fund and Aberdeen announced its fourth acquisition in the space since March.

Indeed, as one of the reasons for its continued acquisition spree in the space, Aberdeen cited a recent PWC report, which predicted total investment in alternative assets would nearly double to $15.3 trillion by 2020, which gives one a sense of the potential market.

"The problem is that the term ‘alternatives’ covers a multitude of things, not all of which are made equal."

This increased demand for alternatives makes sense in a world where most asset prices have been pushed and then propped up by quantitative easing; where bonds are languishing at the business end of a thirty year bull market and market volatility seems increasingly unpredictable.

The problem is that the term ‘alternatives’ covers a multitude of things, not all of which are made equal.

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