Alternatives in the mainstream |
Continue the conversation at the NICSA Annual Conference

It may be time for a name change. How “alternative” are investment vehicles now used by 3 of every 4 financial advisers, according to a recent survey from Cogent Research? Advisers see alternatives as a great way to add uncorrelated assets to a portfolio to increase diversification.

Interestingly, advisers are using traditional routes to incorporate new strategies. When asked what vehicles they used to access alternatives, financial advisers indicated that they were most likely to turn to mutual funds, REITs and ETFs, in that order. Unregulated hedge funds and venture capital funds were much further down on the list. (Click the image on the right for details.)

It’s a blending of the old and the new that’s likely to continue in future – suggest panelists fromCogent Research, Hennion & Walsh and Schooner Investment Management speaking last month at NICSA’s General Membership Meeting. Here are their predictions on trends in non-traditional fund investing:

  • Mutual fund use of alternative strategies will continue growing.
  • Regulators are beginning to realize that current rules are outdated and will permit a broader array of alternative strategies in fund format than they do currently.
  • ETFs will continue to gain share versus open-end mutual funds for passive strategies, as financial advisers look for greater liquidity and flexibility. The outlook for active ETFs isn’t as bright; they’re not the ideal vehicle for accessing manager skill.
  • The tax treatment distinction between ETFs and exchange-traded notes will go away.
  • The move t0 fee-based financial advice creates opportunities for alternative products.
  • The next move for alternative strategy providers may be some sort of “fund of funds” approach, providing “one-stop” convenience for financial advisers.

We’ll be talking more about alternative investments — and the opportunities and challenges they provide for the fund industry – at the NICSA Annual Conference. and Expo.   Join us in Miami on February 10-13 to continue the conversation! Click here for more information and to register.

Connecting investment industry professionals to best practices.



NICSA: 8400 Westpark Drive, 2nd Floor McLean, VA 22102 • Tel: 508.485.1500 • Fax: 508.485.1560