For Caspar Rock, CIO at Architas, the group’s significant weighting to alternatives has been one of the reasons the firm’s funds have performed as well as they have in the past six months.
In Rock’s case the alternatives in question are focused on real assets, particularly in areas like infrastructure, specialist property, catastrophe and complex fixed income.
“Our active and blended funds have had a good weighting toward these sorts of assets for the past three years but they has been a very good booster of performance in the past six months.”
Asked for specific examples, Rock cites the Brooks MacDonald Ground Rents Income Fund, which he says invests in property of the highest credit quality and provides proper inflation linkage.
“We have concentrated explicitly on real assets, alternative assets with something tangible behind them that also pay a yield of some sort because, I want to be paid for the patience that is required to own them. And I want some linkage to inflation.”
Other areas of interest, Rock says are in quoted infrastructure, where he says valuations have come back somewhat, doctors’ surgeries and, energy Master Limited Partnerships.
But, he points out, “In this space there are quite a lot of assets with an information asymmetry – where the seller knows more than the buyer – but a specialist investor can do well.
It is the sort of area that really lends itself to multi-management,” he adds, as a note of caution.
John Chatfeild-Roberts, manager of the Jupiter Merlin fund range has a slightly different view. Asked recently about the challenges posed by the current valuations within bond markets, he said: “The most expensive words in the investment world are this time is different.
“There is no doubt that we have been through a bull market for bonds, but if you look at the alternatives you might want to invest in there is reason to be cautious.
“If you are essentially running for cover, be very careful about what you buy because you might be buying something that you thought you understood and didn’t.”
For Chatfeild-Roberts, there are good arguments to hold cash, if you feel things are getting tricky.
“No one in the investment world is a wizard, we can only play the hand dealt. And, if something looks too good to be true, it probably is.”
