While recent studies have indicated a burgeoning demand for alternative investments from the client side, accessing the relevant products has proved “very problematic,” explains Matt Brown of CAIS, the New York-based alternatives investment platform provider which launched in 2009 and has since seen assets grow by 20 per cent month-on-month.
Although "alternative investments" is a difficult term to define absolutely, it broadly refers to “non-traditional” asset classes such as hedge funds, private equity, real estate and precious metals, as opposed to stocks, bonds and mutual funds, for example.
Ultra high net worth investors are planning to allocate an increasingly large share of their portfolios to alternative investments, as highlighted by the Institute for Private Investors in its annual Family Performance Tracking survey earlier this year. Yet findings from a recent PENSCO survey showed that, although eight in 10 advisors said their clients have expressed an interest in investing in alternative assets, a mere 10 per cent of advisors actually offer that capability.
One problem, according to Matt Brown, CAIS chief executive, relates to the structure of the alternative investment community, which in terms of product format is “all very institutional in nature” and “doesn’t necessarily correspond with how an advisor needs that product delivered,” he says, speaking to Family Wealth Report.