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Advisers return to alternatives following backlash

Financial advisers copped the brunt of the backlash from clients when hedge fund instruments imploded during the GFC but they are slowly returning in a search for diversification.

Winston Capital Partners will be distributing the Select Alternatives Portfolio from Select Asset Management to Australian advisers under a new arrangement, with Neuberger Berman on board as investment consultant to Select.

Winston founding partner and managing director, Andrew Fairweather, told a media briefing yesterday Australian advisers have been noticeably increasing their allocation to alternatives recently after bearing the brunt of client anger when hedge fund instruments froze or failed over the GFC.

In the US the alternatives market is around $700 billion, or 6 per cent of the investment pool, whereas in Australia (if you use BT Wrap as a proxy) alternatives only account for around 1 per cent – suggesting plenty of room for growth, according to Mr Fairweather.

“Alternative investments have a place in a mainstream portfolio but a new way forward is required,” he said.

“Australian retail investors lag international peers in respect of their asset allocation to alternatives.”

Select chief investment officer Dominic McCormick said alternatives are necessary for a genuinely diversified portfolio but it has been “challenging to create vehicles that make sense for retail investors.”


Investors are becoming more engaged and now demand a higher level of liquidity and transparency, with lower fees, he said.

Today’s ‘new breed’ of investment managers have a transparent focus on must-have liquidity and global capability, and are helping to redefine alternatives as prized portfolio tools for retail investors and financial advisers, according to Select.