Advisers ignoring alternatives: Blue Sky

A lack of awareness among advisers in regard to alternative assets has seen the asset class struggle to gain traction with planning groups, according to Blue Sky Alternative Investments.

Blue Sky Alternative Investments director Alexander McNab said while some alternative assets now offer daily liquidity, resolving many of the structural barriers of the past, advisers are still predominantly focused on equities and fixed income alone.

Mr McNab said allocations to alternatives within the Australian adviser channel are much lower when compared with other countries and larger Australian institutions.

“If you look offshore you see substantially higher allocations to alternatives - often 20 to 30 per cent of a portfolio,” he said.

Mr McNab said advisers need to be educated to “bring them up to speed with the benefits of alternatives and the role they play in a portfolio”.

“[Alternatives] contribute to the returns of a portfolio and are often uncorrelated with listed equities, which can reduce overall volatility,” he said.

Mr McNab said a lack of clarity around the liquidity levels of particular alternative products in the past, such as during the GFC, also continues to prevent advisers from recommending alternatives.

He explained, however, that liquid alternative products such as those with listed investment company structures mean liquidity is no longer an issue for advisers looking to give their clients exposure.

It also means advisers are no longer restricted by the liquidity requirements of platforms, he said.

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