Demand for Alternative Investments Remains Strong

Alternative investments continue their run.

Alternative investments continue their run.

Yeah, but what about their place in 401(k) investment menus?

First they were great, and then 2008 hit and not-so-much, and then managed futures did well and everyone wanted to be David Swensen.

According to new research from global analytics firm Cerulli Associates, despite all that, the demand for alternative investments among institutional clients remains strong.

“Expectations regarding future capital market returns and the need to optimize risk-adjusted performance are the leading drivers of investors’ interest in alternatives,” Michele Giuditta, associate director at Cerulli, said in a statement. “With equity and bond valuations stretched, the potential diversification benefits and alpha provided by alternatives appear favorable on a relative value basis.”

Cerulli’s most recent report, U.S. Alternative Products and Strategies 2016: The Multiple Roles of Alternative Investments, analyzes asset managers that manufacture and distribute alternative products in the United States. The report focuses on the U.S. retail and institutional alternative product landscape and the distribution and development trends in the U.S. alternative asset market.

“Institutions remain the top client channel that managers are seeing demand for alternatives from,” Giuditta adds. “For the purpose of developing their alternatives business, more than 50 percent of asset managers polled consider the institutional channel to be equally important as other channels; meanwhile, nearly one-third of managers cite it as being their most important target for alternatives.”

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