A new report released by Moody's Investor Services suggests that an increased shift towards higher allocations to Alternative Investments, including absolute return driven strategies, is a result of investors'search for higher returns.
Moody's report indicates that the increased allocations to alternatives are likely to continue and that skilled asset managers will benefit accordingly as FUM increases. As such some traditional fund managers have been acquiring alternative asset-management expertise, noting that building such expertise organically takes a long time.
Moody's notes that the higher investment management fees, coupled with the ability to charge performance fees, is a significant attraction to fund managers adding alternative products to their existing offerings.
The Moody's report is based on their global research but is likely to be reflected in Australia as investors become increasingly aware of the quality of Australia's pool of fund managers, and are attracted by the risk adjusted returns available from thier absolute return funds. At the same time offshore asset managers continue to target the ever increasing superannuation asset pool.
For more information see Moody's media release.
