Alternative Investments on the Rise

In 2008, the financial sector faced one of its worst crises, which led to the fall of some of the biggest names in the industry. As a result of that crisis, portfolio managers have been constantly on the lookout for ways to mitigate risks and ensure profitability amid the unexpected developments in the world of asset management. Turning to alternative investments has been one such course.

Most fund managers refer to alternative investments as funds whose dynamic run contrary to the movement of traditional investments such as bonds and public equities, and the rest of the market. Thus, it can be said they promote portfolio stability. Among the types of alternative investments are private equity funds, hedge funds, and real estate.

Two years ago, alternative assets accounted for 12% of the industry assets globally. The numbers are expected to rise further: By 2020, experts predict that alternatives’ share will be 15%. Key to this expected growth is a client base that more and more appreciates the strategies being employed by fund managers to address the risks associated with alternative investments.

Furthermore, alternative asset managers are becoming increasingly regulated, and they have been responding well, through the adoption of services and technology that boost transparency and efficiency in operations. With this development, financial advisors and the fund managers themselves will be more confident about presenting alternative investments as a truly profitable venture to the erstwhile hesitant client-investors.

Truly, alternative investments present a lot of opportunities for asset diversification – a popular strategy to minimize risks amid a fast-changing financial landscape. It is a landscape that has been welcoming the entry of new players and heightened interest in new markets across the globe, especially in Asia. This year, for example, a Deutsche Bank survey revealed that 30% of investors are keen on investing in China and over 25%, in India, with the figures representing an increase of about 12% and 21%, respectively.

To find growth in the alternative assets scene, it is important that fund managers leverage middle and back office solutions to aid in fund administration, accounting, reporting, data management, and client relation functions. Having the human resources and the technology infrastructure to provide support in these roles spell the difference between high-performing alternative assets managers from the rest. And as is often the case in the financial sector, good performance only leads to more investors, which lends the opportunity for even greater success.