Liquid alts demand set to surge as traditional lines blur
Demand for liquid alternative UCITS funds is expected to more than double to $664bn by 2020, PwC says in a new report.
Citing Morningstar data, the report, titled Alternative asset management 2020: Fast forward to centre stage points out that demand for liquid alternatives has already jumped significantly, growing at a compound annual rate of 50% between 2008 and 2014 to hit $304bn,
The second wave of growth, however, will come on the back of a maturation of the broader alternatives landscape which it expects to grow at a compound annual growth rate of at least by 8.1% between now and 2020 to hit $13.6trn, and will increasingly focus on the retail space, where we will continue to see a blurring of the lines between the traditional and the alternatives space – especially within the defined contribution pensions fund market.
“For some alternative firms, the emergence of liquid alternatives is an enabler, while for others it is a disrupter,” PwC writes, pointing out that, in broad terms traditional fund managers will continue to dominate the retail alternatives space in the 2020s because they understand the registered products and control the retail-focused platforms.
Much of the growth in this market has been within funds that promise specific outcomes, and is evidenced by the growth in assets under management in products such as Standard Life GARS and Aviva’s AIMS product.
Indeed, PwC writes that the evolution of the broader alternatives space: “Alternative firms, with their emphasis on investment outcomes rather than products, and specialisation rather than commoditisation, will increasingly attract investors seeking customisation, diversification and genuine long-term alpha.”
