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The pros and cons of including alternative investments in multi-asset-class portfolios

19 May 2014

Alternative investments have delivered very attractive returns over the past 20 years not only on a stand-alone basis but also on a risk-adjusted basis. Since 1994 the HFRI Composite Index (a broad index of hedge fund managers) has returned 9.01% on an annualised basis with a standard deviation of 7.01% versus a return of 6.99% and a volatility of 15.29% for the MSCI World Index. These funds have typically also exhibited low correlation with traditional asset classes making it a very attractive option for inclusion in a multi-asset portfolio from a diversification point of view. This correlation profile tends to be specifically beneficial during times of market stress as the correlation between traditional asset classes tends to move to 1. During the 2008 financial crisis for example the correlation between equities and hedge funds only increased to 0.67.

Maitland launches AIFMD fund platform in Luxembourg

19 May 2014

Maitland has received approval from the Luxembourg regulator (CSSF Luxembourg) for its Alternative Investment Fund Manager Directive (AIFMD) compliant management company and its specialised investment fund. This together provides fund managers with a solution to the regulatory and supervisory burden associated with the AIFMD, enabling them to focus on their core fund management activities.

Emerging Markets: Ugly Duckling or Swan?

19 May 2014

The late Sir John Templeton once said, “To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest ultimate rewards.” Emerging markets have seen what could be described as despondent selling during the second half of 2013 and in early 2014. Investors may be wondering whether it’s time yet to buy—or to stay away. Stephen Dover, managing director and international CIO, Local Asset Management at Franklin Templeton, offers a reminder that even the hottest stock or market eventually cools and, as investors chasing performance pile in, they often wind up out in the cold. On the flip side, avoiding markets that may be out of favour today means missing out on potential gain tomorrow. For this and other reasons, Dover thinks it would be folly to ignore emerging markets, today’s ugly duckling, which he believes could be holding a future as a swan.