A Global Shift to Alternative Assets

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ARLINGTON, Va., July 17, 2017 (GLOBE NEWSWIRE) — The world’s largest 100 alternative asset managers saw assets under management increase by 10% in 2016, rising to $4 trillion, according to the 2017 edition of Willis Towers Watson’s (NASDAQ:WLTW) Global Alternatives Survey. The survey, which captures long-term institutional investment trends by seven main investor groups across 10 alternative asset classes, showed that of the top 100 alternative investment managers, real estate managers have the largest share of assets (35% and over $1.4 trillion), followed by private equity fund managers (18% and $695 billion), hedge funds (17% and $675 billion), private equity funds of funds (12% and $492 billion), illiquid credit (9% and $360 billion), funds of hedge funds (6% and $228 billion), infrastructure (4% and $161 billion) and commodities (1%).

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Should income hunters ditch dividends and buy companies’ bonds instead?

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Times are tough for those who invest in shares for income.

Where dividends look secure, demand has pushed prices up – so the yield on newly invested money has gone down.  With the backdrop for shares uncertain, most investors would be content to know merely that their modest income will be maintained and their capital protected from losses.

Unfortunately, such assurances never exist in the stock market. There is, however, a way to achieve these things from investing in companies: by lending to them via bonds, rather than buying a stake in them through shares.

Read more on Telegraph

Alternative investments could be return-enhancing: CAIA’s Keith Black

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Moneycontrol News

The Chartered Alternative Investment Analyst (CAIA) Association is a global organisation offering education programme for individuals specialising in institutional-quality alternative investments. Keith Black, Managing Director, Curriculum Exam, CAIA Association, shared his views with Moneycontrol on some aspects of alternative investment. Excerpts:

What are the benefits of investing in alternative investments? Are these investment mainly for high net-worth individuals?

Alternative investments can serve different roles in a portfolio, either return enhancers or risk reducers.  Some investments, such as private equity and venture capital, have high expected returns.  Allocating assets to these return-enhancing investments increase the expected return on the portfolio.  Most other alternative investments, such as commodities or hedge funds, serve roles as diversifiers in a portfolio.  That is, the return to commodity investments are driven by different risk factors than are stocks and bonds, where stocks and bonds may be negatively affected by inflation while commodities can benefit during times of increased inflation.

 

Read more on Money Control

Alternative investments could be return-enhancing: CAIA’s Keith Black

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The Chartered Alternative Investment Analyst (CAIA) Association is a global organisation offering education programme for individuals specialising in institutional-quality alternative investments. Keith Black, Managing Director, Curriculum Exam, CAIA Association, shared his views with Moneycontrol on some aspects of alternative investment. Excerpts:

What are the benefits of investing in alternative investments? Are these investment mainly for high net-worth individuals?

Alternative investments can serve different roles in a portfolio, either return enhancers or risk reducers.  Some investments, such as private equity and venture capital, have high expected returns.  Allocating assets to these return-enhancing investments increase the expected return on the portfolio.  Most other alternative investments, such as commodities or hedge funds, serve roles as diversifiers in a portfolio.  That is, the return to commodity investments are driven by different risk factors than are stocks and bonds, where stocks and bonds may be negatively affected by inflation while commodities can benefit during times of increased inflation.

 

Read more on Money Control

ANALYSIS: Is it the right time to be piling into bonds?

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Portfolio advisers have been looking at equity market valuations rather nervously for some time, tilting towards less risky assets, taking profits and holding more cash.

But has broader sentiment now caught up?

The UK’s Investment Association (IA) statistics for May show £230m ($296m, €260m) was invested in the IA Sterling Strategic Bond sector, while UK equity funds experienced a net retail outflow of £479m. The UK All Companies sector saw outflows of £532.1m, while UK equity income lost £23.1m.

Nexus IFA director Kerry Nelson says this could signal a shift from equities to bonds.

Read more on International Adviser 

UK investors pile into bonds and sell down UK equities

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Investors piled into the IA Sterling Strategic Bond sector in May, while UK equity funds experienced a net retail outflow of £479m ($642m, €566m), according to the latest IA statistics.

Rising from fourth in the net retail sales charts in April, the IA Sterling Strategic Bond sector topped May’s rankings after attracting net inflows of £392m.

Meanwhile having been the worst selling sector in April, with outflows of £277m, the Sterling Corporate Bond sector soared into fifth place in May with net sales of £230m.

 

Read more on International Adviser 

How investors can find bond yield in a low-interest environment

Interest rates remain close to historical lows, despite the global economy growing at a steady pace, and the search for yield is becoming more and more difficult.

Although the US Federal Reserve is in a tightening cycle, this remains gradual and the central banks of many other developed countries maintain accommodative monetary policies. The European Central Bank (ECB) has not yet provided details on its plan for exiting its quantitative easing programme. But leaked comments on tapering suggests modestly higher interest rates in the next two years as the economic situation continues to improve.

Meanwhile, the Bank of England is likely to be cautious on raising interest rates. It needs to balance inflation concerns and growth prospects against an uncertain background of Brexit negotiations and a minority Conservative government.

 

Read more on City Wire

Pound tourists’ shop for UK corporate bonds

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The weakness in the pound has spurred greater demand from foreign investors for UK debt securities, with “sterling tourists” hailing mainly from Europe, helping British companies sell bonds. The trend is a sign of how the dramatic depreciation in the pound since the UK voted to leave the EU has rippled across the country’s financial markets, with sales of sterling-denominated debt running at a much faster pace than last year. UK companies have dramatically increased their borrowing in sterling compared with 2016, when concerns over the EU referendum stymied issuance. Companies rated investment grade have sold £17.3bn of bonds so far in 2017, compared with £6.2bn over the same period last year, according to Lloyds data.

Read more on Financial Times 

UK bond market on track for the biggest losses in our time, says investment officer

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Investors in the U.K. bond market could see losses on their bond portfolios as the Bank of England continues to be behind the inflation curve, an investment officer told CNBC on Monday.

“I see a scenario where losses will be inflicted on bond portfolios like we’ve never seen in our time,” Christopher Peel, chief investment officer at Tavistock Investments, said Monday.

“Governments and corporations have been issuing longer and longer duration maturity debt which has made its way into the markets themselves. When you look at the gilt market going back at the end of 90s the average duration of the guilt mark was around six and a half years, now it’s around eleven. That’s a recipe for losses in the most conservative portfolios,” he said.

Read more on CBNC

Premium Bonds: alternative savings accounts which offer higher returns

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The nation’s favourite savings account

Premium Bonds are the nation’s favourite savings account, with an incredible £68 billion held in bonds across the UK in total, a staggering amount really.

In recent years, that number has jumped sharply as the maximum amount that could be held in bonds has increased, initially to £40,000 in June 2014 and then up to £50,000 the following year.

There are a few obvious attractions to putting your money into a Premium Bond. For starters, there’s the fact that your cash is completely protected by the Government.

Premium Bonds are run by the Government-backed National Savings & Investments, and so every pound you put into them is entirely safe.

 

Read more on Love Money