ETFs for ‘Alternative’ Asset Classes
May 23rd, 2012 at 9:27am by Tom Lydon
ETFs have allowed advisors and investors to get more sophisticated in their investment objectives, branching out from traditional stock and bond picks. Consequently, “alternative” assets and exchange traded funds now make up a larger portion of investment portfolios.
Fund providers, like BlackRock, Eaton Vance, Forward and OppenheimerFunds, are catering the growing interest in alts as alternative funds attract $213.7 billion, or 2.8% of all mutual fund assets, according to Cerulli Associates, reports Beagan Wilcox Volz for Ignites. Cerulli Associates estimates that market share in alts assets may expand to nearly 16% over the next decade.
McKinsey & Co., though, calculates that alts’ 2010 shares of fund assets was 7% and projects assets to grow to 13% in 2015.
OppenheimerFunds has touted alternatives as a way to diversify or hedge against currency risk.
“But what we’ve started doing more recently is being more focused from the product standpoint to highlight them,” Kamal Bhatia, SVP and product director of fixed income and alternatives at OppenheimerFunds, said in the Ignites article.
BlackRock contends that alternative mutual funds and ETFs can also improve performance, yield and risk management.
“They can be made in the core parts of your portfolio,” Frank Porcelli, managing director and head of BlackRock’s U.S. retail business, said in the story.
As fund providers expand their alternative asset lines, investors will require greater education to optimally utilize the new investment tools. Hari Krishnaswami, senior managing consultant at kasina, pointed out that advisors, who are already using alternative products, want more education on alt strategies.
According to a kasina survey of more than 400 advisors, 65.6% of respondents want more education on currency funds – 43.5% of whom already use the funds.
In June, we are hosting an Alternative Investments Virtual Summit, which will help provide advisors with industry guidance on how alternative assets fit into an investment portfolio. The virtual conference will bring the conference experience to you at your own office, home or anywhere with Internet access as it is a virtual online experience.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.