New research with 200 UK wealth managers, financial advisers, discretionary fund managers, fund selectors and investment analysts from TIME Investments (TIME), which specialises in asset-backed income-producing funds, reveals the growing importance of alternative asset classes in investment portfolios.
The majority (96%) of respondents said that their clients have an allocation to alternative investments, which include asset classes such as private equity, private credit, hedge funds, infrastructure and real estate. Furthermore, 97% believe that the current challenging economic climate favours investments in alternatives such as real assets.
When it comes to allocations to alternatives as part of their clients’ portfolios, 29% are currently targeting a range of 6% – 10% of their portfolios, 35% are targeting 11%-15% and 26% are targeting between 16% – 20%. However, the majority (78%) said that they expect allocation to alternatives to increase over the next 12 months.
Despite the positive sentiment towards alternatives from advisers and fund selectors, the research showed there are still challenges to increasing allocation to them. The first is investment strategy choice, second is limited knowledge and understanding of the alternatives market and, third, is the lack of expert alternatives fund managers.
These concerns are also reflected in the most important criteria when choosing an alternatives fund manager, with 60% saying investment strategy was key, followed by expertise across asset classes and regions (47%), and 43% saying an ESG approach was important.
Henny Dovland, Business Development Director at TIME Investments said: “Our research shows that wealth managers, advisers and investment professionals are already allocating significant proportions of client portfolios to alternative investments, with targets set to increase. This is largely driven by the prevailing economic conditions and more conventional asset classes such as equities proving highly volatile. Alternatives provide diversification and attractive yields as investors seek to weather the storm.”
TIME is part of the Alpha Real Capital Group, which encompasses Alpha Real Capital LLP (AlphaReal) and TIME Investments. AlphaReal is a specialist real assets investment manager focused on secure income strategies. It invests in UK and European assets with predictable secure long-term cash flows. It provides market leading and innovative real asset solutions across a range of investments such as Commercial Ground Rents and long lease property, renewable infrastructure, social infrastructure and secured lending, combining operational real estate expertise and fixed income skills.
TIME is the Group’s authorised wealth management investment solutions arm. The Group works with a wide range of UK, European and international investors, including pension funds and other large institutional investors, as well as private investors, family offices and wealth managers. Together, the Group has a 180-plus strong professional team and £4.5 billion of assets under management.
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