Alternative investment ideas evolving

05-Feb-2015

By Krystine Lumanta

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The Australian alternative investment space is beginning to see the development of different concepts and asset classes, such as social infrastructure.

Blue Sky Alternative Investments chief investment officer Alex McNab said while there were not many new developments coming out of traditional private equity and venture capital, there was no shortage of ideas for new alternative investments.

“We are beginning to see the emergence of new asset classes around social infrastructure – the provision of social-style accommodation, so things like student accommodation, increasing private sector participation in things like public-private partnerships,” McNab told financialobserver yesterday.

“That’s likely the new wave of new ideas in private real estate.

“The other area where we’re seeing new ideas is in real assets, particularly agriculture, as there’s no doubt that Australia is an attractive place to invest for large institutional investors and the decline in the Australian dollar is only going to accelerate that trend.”

He added there were also a good number of strategies for hedge funds.

From an investor perspective, a number of new products were now broadening out and targeting investors beyond the traditional large institutions, he said.

“But to build alternative asset products genuinely to attract retail investors and their advisers is actually pretty hard,” he said.

He said he believed the 2015 outlook for the sector was very positive.

“One of the things that characterises alternatives is that it’s the search for diversified return streams relative to a portfolio dominated by equities,” he said.

“I think given the volatility that we’re seeing in the market, some of the substantial uncertainty we’re seeing around the world, it’s a very sensible time for investors to think about having that diversification in their portfolios.”

In addition, allocations to alternatives continued to increase as Australians were paying more attention to the experience overseas, he said.

“We’re reaching a point where investors in Australia are beginning to allocate 15 per cent to 20 per cent of their portfolio into alternatives,” he said.

“That’s not evenly split – there are institutional investors that allocate more and retail investors typically allocate less.

“But what we’re seeing is that the Australian investment community is really taking notice of the way that offshore investors have benefited from allocations to alternatives.”

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