The fundamental investment objectives of managing risk, generating income and driving returns have not changed, but ways to achieve them have. The traditional asset allocation strategies used to advance these objectives have in some cases been rendered ineffective in a market where near-zero global interest rates and bonds no longer play the role they once did.
As covered in Alternatives – A tool for the times, the portfolio benefits of alternative assets continue to attract the attention of global investors, leading to more mature markets for these assets and an improved offering. In the second instalment, Three ways alternatives can enhance portfolios (linked below), we look at how different alternative assets can help manage risk through diversification, generate the income once provided by bonds and term deposits, and pursue outsized growth and capital appreciation.
Crucially, we also focus on the importance of manager selection where performance is highly varied, and provide a window into Lipman Burgon & Partners’ manager selection criteria as a guide.