Trump Is Biggest Global Risk in 2017, Alt Investors Say

Big geopolitical shifts and tech disruption put alternatives sector on guard, according to conference attendees

The alts industry faces "major gepolitical shifts around every corner." (Photo: AP) The alts industry faces "major gepolitical shifts around every corner." (Photo: AP)

In a world increasingly on tenterhooks about perceived threats, the Trump administration represents the biggest potential global risk in 2017, according to 44% of participants in the recent Cayman Alternative Investment Summit in Grand Cayman.

Far fewer of some 200 alternative investment decision makers and thinkers who participated in the survey were worried about other risks: cybersecurity, 25%; China, 14%; European elections, 13%; and Brexit, 4%.

Prime Minister Theresa May’s government has announced that Britain would start the two-year Brexit negotiation process on March 29.

“This next year will be unlike anything the alternative investment industry has ever faced,” Chris Duggan, director of the not-for-profit CAIS and vice president of community development for event sponsor Dart Enterprises, said in a statement.

“With rapid technological changes and major geopolitical shifts around every corner, the industry must show that it can chart a path through what promises to be choppy waters.”

Eighty-five percent of survey respondents said the alternative investment industry would grow assets over the next five years.

Forty-six percent predicted that the number of funds would shrink over that period, while 39% said there would be more funds. Only 8% believed that both industry assets and funds would dwindle, and 7% foresaw fewer assets but more funds in the future.

“Although the challenges abound, there is strong enthusiasm among both investors and fund managers that, while still evolving, the industry will only continue to grow,” KPMG’s head of alternative investments, Tony Cowell, said in the statement.

Other Findings

Fifty-one percent of survey participants chose a victory by Marine Le Pen in the French presidential election as the next event most likely to upset global markets. However, a recent analysis by The Economist gave Le Pen a less than 5% chance of final victory in the two-round election.

Forty percent of investors among the survey participants were most bullish about the opportunity for 2017 returns from real estate and real assets, well ahead of the 28% who were similarly upbeat about commodities, 18% about equities and 14% about credit.

Philanthropy continued to be a big theme at the conference.

A third of survey respondents said they regularly donated to a variety of causes or charities, and an additional 27% said they donated to a specific cause or charity. Twenty-two percent also sat on the board of a charity and partnered with other philanthropic organizations or investors.

A recent listing of the most generous philanthropists in the U.S. named many donors whose source of wealth was finance or real estate.

In the coming year, 31% of respondents said they expected artificial intelligence to be the emerging technology that would have the biggest effect on the world.

Nineteen percent picked robotics/automation, 18% blockchain, 16% cybersecurity, 10% self-driving cars and 5% wearable tech.

A recent report said that public distributed ledgers, such as blockchain, had downsides that made them unsuitable for the requirements of financial firms.

Autonomous Research, a fintech analysis outfit, recently rolled out a set of analytical products with insights into various fintech trends.

--- Check out Hedge Funds Accede to Demands for New Fee Structures on ThinkAdvisor.

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