Alternative Investments: Alts Offer Most Effective Downside Protection – Smith & Williamson

August 12, 2021 | Alternative Investments, News

Smith & Williamson had £21.9 billion (US$ 30 billion) of funds under management and advice as of 30 June 2020.

According to Smith & Williamson Investment Management’s Managed Portfolio Service, alternatives will perhaps offer the most effective protection against market declines over the coming decade. Fixed income allocations, which traditionally were the investors’ fall-back in times of market turmoil, may not be as effective, and going forward, alternatives are better suited for diversifying investment portfolios and controlling risk. (Wealth Adviser)

Bonds are no longer relevant for protection

“What’s going to protect your portfolio in the next ten years? It’s not going to be what protected it 20 years ago, because bonds now offer you minimal protection,” says James Burns, co-manager of Smith & Williamson’s Investment Management MPS.

“We are overweight index-linked bonds because we are of the view that if you are going to hold fixed income, it should be linkers, such as the ASI Global Inflation-Linked Bond Fund. But otherwise, bonds are going to offer you negligible portfolio protection and investors will be better served looking elsewhere.”

“Strategies such as the Neuberger Berman Uncorrelated Strategies Fund and Picton Property Income REIT are the type of diversifiers that help protect portfolios and that’s why we hold them,” says Burns.

Alts: Returns and costs

Investors would do well to invest in alternatives that earn 4 – 5% a year though they might worry about high fees.

However, Burns has this to say on fees: “It’s tempting, in a post-MiFID world, for clients to focus heavily on costs. But lots of alternative strategies such as hedge funds or property REITs pay for themselves in what they offer in returns and diversification.”

“For defensive portfolios seeking to protect against the downside, we think that alternatives are – and will remain for years to come– the best way to protect capital.”

Smith & Williamson

As of September 2020, Smith & Williamson is part of the Tilney Smith & Williamson group.

It employs over 1,800 people across 11 offices in the UK, Ireland, and Jersey, and is also the 8th largest UK accountancy firm.

Related Story:   Man Group Reports Alternatives Funds AUM At $77.2B                                               

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
Venture Capital: Property Management Platform Guesty Lands $170M Series E
August 17, 2022     Latest News, News, Venture Capital

Guesty, which provides management software for the short-term rental, vacation rental, and hospitality industry, has raised a $170 million Series E round led by Apax Digital Funds, MSD Partners and…
Alternative Investments/ESG: Morgan Stanley To Debut In ETFs With Four ESG Equity Funds

Morgan Stanley (NYSE: MS), which coined the term “exchange traded fund” in the 1990s, is making a comeback into the $6.9 trillion ETF market with four socially conscious and sustainable…
Digital Assets: Crypto Adoption Makes Progress In Brazil – XP Inc Unveils Crypto Trading
August 16, 2022     Digital Assets, News

After Nubank and Mercadolibre, XP Inc., the Brazilian brokerage with over 3.6 million customers, has launched a crypto trading platform dubbed XTAGE. Initially, trading will be offered only in bitcoin…
Artificial Intelligence: Israeli Startups ASTERRA, Albo Climate Use Satellites And AI To Hunt For Lithium And Carbon

Satellite sensors are delivering valuable data to Israeli startups for analysis with AI to obtain insights on the extent of absorption of carbon on land, as well as locate valuable…