Liquid Alternatives: Cerulli Research Expects Higher Demand For Liquid Alternatives In Europe

December 7, 2020 | Liquid Alternatives, News
https://dailyalts.com/wp-content/uploads/2020/12/eiffel-tower-768501_640.jpg

However, 2020 will be another negative year for net new inflows into liquid alternatives in Europe.

The need for diversification and the promise of uncorrelated returns will boost demand in Europe for liquid alternatives over the medium term, says new research presented in the latest issue of The Cerulli Edge – Global Edition. (HedgeWeek)

Liquid alternatives still in the game

Cerulli believes that declining fees, their greater transparency, and the potential for uncorrelated returns could encourage investors to diversify their portfolios into liquid alternatives.

Further, the pandemic could have an adverse and disruptive effect on the financial markets. This could work to the advantage of liquid alternatives fund managers through higher inflows.

Moreover, the liquid alternatives market could benefit from investors’ interest in private assets, particularly real assets. Cerulli projects that this trend will likely remain strong. It expects rising demand for these assets from wealth management firms and private banks.

A forgettable 2020

On the flipside, Cerulli projects that 2020 will be an indifferent year for liquid alternatives like its predecessor.

During 2020, the performance of liquid alternatives was superior versus the traditional investments in the initial months of the pandemic. However, the recovery in the financial markets thereafter took away this advantage.

“Net new flows of liquid alternatives in Europe will likely be negative for a second consecutive year in 2020, although net new outflows are expected to moderate in the latter part of the year,” says Andrius Dovydavicius, a research analyst with the European institutional team at Cerulli Associates.

Liquid alternatives assets under management in Europe as at the end of September 2020 fell 15% from the beginning of the year to € 356 billion.

However significantly, withdrawals declined to only $ 1 billion during the third quarter.

Cerulli’s crystal ball

Pointing to the better performance achieved by ESG liquid alternative funds, Cerulli advises fund managers to incorporate an ESG focus into their portfolios.

The managers may also be better off by closing down those funds that have disappointed investors with their performance.

Lastly, managers should be prepared to take fee cuts in their stride. Cerulli’s research shows that nearly a quarter of European institutional investors were looking to negotiate higher discounts on management or performance fees.

“We believe that the sector will stabilize. However, managers will need to adapt to asset allocators’ shifting preferences to succeed,” says Dovydavicius.

Related Story:   European Investors Prioritizing ESG Factors In ETFs (Cerulli)                                             

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.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2021/07/4617521473_66c01e50ee_c.jpg
Alternative Investments/ESG: A Shariah Compliant ETF Tracking China ‘A’ Shares Debuts In Malaysia

Value Partners Group Ltd listed today the VP-DJ Shariah China A-Shares 100 ETF, the world’s first Shariah-compliant A-share exchange traded fund (ETF), on Bursa Malaysia. The ETF provides investors exposure…

https://dailyalts.com/wp-content/uploads/2021/07/Tably-screengrap.jpg
Artificial Intelligence: Tably, An AI-Powered App, Can Tell How Your Cat Is Doing
July 28, 2021     Artificial Intelligence, News

Sylvester.ai, which uses AI to improve animal health outcomes, has created Tably, an open beta app that “a cat parent” can download and better understand their pet’s health and mood….

https://dailyalts.com/wp-content/uploads/2021/07/COMBINED.jpg
FinTech: Alternative Investments Platform Yieldstreet Funded Over $2 Billion
July 27, 2021     Alternative Investments, FinTech, News

Yieldstreet offers retail investors the opportunity to invest in alternative asset classes such as real estate, marine, art, legal finance, and commercial lending. Products are offered across a range of…

https://dailyalts.com/wp-content/uploads/2021/07/E7Ti8B0WQAAh3K7.jpg
Venture Capital: DataRobot Banks $300M Series G; Acquires Algorithmia

DataRobot announced today its raise of $300 million in a Series G round led by existing investors Altimeter Capital and Tiger Global and joined by new investors Counterpoint Global (Morgan…