Financial planners who invested a third of clients’ money into alternative assets have created more wealth for them than advisers using portfolios biased to global stocks, according to Schroders.
The firm compiled a United States-based study which showed portfolios with a third of their money in alternatives – typically run by universities like Yale and Harvard – have returned 11.7 per cent per annum for the last decade.
Conservative portfolios, with typically 10 per cent invested in alternatives, averaged returns of 6.3 per cent a year.
“The history of the last 10 years…has been that global equities have not provided the diversification we hoped for or that we would have enjoyed back in the 1980s,” Schroders group chief investment officer Alan Brown said.
Brown said Australian stocks were an exception. The All Ordinaries Index had nearly doubled since 2000 when it peaked in November last year.
“Australia has had more of an independent life than almost [any other market], and that’s a good thing,” he said.
He added that Schroders Pension Plan had ramped up its asset allocation to alternatives and said institutional investors and financial advisers’ with high net-worth clients were bound to do the same.
Alternative assets include hedge funds, futures trading, venture capital, natural resources and private equity.
