NEWS & BLOGAlternative Investment Strategies in New Normal: From Optional to ‘Essential’
Alts Axis We expect to see the shift from passive to active management continue for some time in our new normal. But as our founder and CEO Mark Salameh recently said during a “Gaining Perspective” podcast, while this may be a shift in direction for retail investors, it isn’t necessarily a new trend among institutional investors.
“…given the bull market that we’ve had for the last decade – you know, passive was the hot topic. But [as a result of] the pandemic, active management really came to the forefront again. And that really drove greater interest in alternatives – [for] mainstream [investors], that is,” Mark said. “But … over the decade-long bull market, institutional investors were increasing their allocations in alternatives, which [was] the opposite mindset of a retail investor … their mindset was: I have to continuously manage my portfolio and make sure I’m prepared for the downturn so that I am ahead of the curve – not behind the curve – in preserving my client’s wealth.”
He added: “So while for mainstream [investors], yes, passive was in … what we were seeing in the alternative investment industry [before the pandemic] was institutional allocators were continuously managing their portfolio, managing their risk – and preparing for the inevitable volatility that we always encounter.”
Alternatives Become Essential
The new market environment continues to swing on, and take hits from, continued uncertainty. But one thing is certain for investors in a post COVID-19 world: they can no longer ignore alternatives, as they have become an “essential” consideration for investment management and planning a financial future.
Anton Pil, global head of alternatives – asset management at JPMorgan Chase & Co, may have said it best:
“So where does that leave us for 2021? What is essential in the year ahead? Alternatives, perhaps once considered optional in investors’ portfolios, have indeed become essential. Facing stretched valuations in traditional markets, limited correlation benefits between fixed income and equities, and persistently low bond yields with asymmetric risk, investors have made a decided turn to alternatives in the pursuit of alpha, income and diversification,” Pil wrote in a foreword note of the firm’s 2021 Global Alternatives Outlook.
Samantha Kempe, co-founder and CIO at IMMO Capital, agrees.
“Against this backdrop, alternative asset classes – from real estate, private equity, hedge funds, venture capital to distressed securities – are rising up the agenda as a means of future proofing and diversifying portfolios. Once viewed as optional in investors’ portfolios, alternatives have become essential, particularly with bond markets experiencing historically low and negative yields and high valuations in the financial markets,” she recently wrote in an article titled “Alternative Investment Strategies: A Key Trend for 2021 and the Post-Covid World.”
Our AXIS platform can help you stay in front of the investing trends, shifts and reversals. We believe transparency, and engagement, can lead to well-informed alternative investment decisions. To learn more, explore our solution and community at https://altsaxis.com/about/.