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Rydex to Help FAs with New Infomation Push

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Rydex Investments is rolling out a campaign for financial advisors that focuses on how alternative investments can be added to a portfolio to achieve true diversification.

According to recent Rydex “AdvisorBenchmarking” findings, more than half of registered investment advisors surveyed, 55 percent, have steadily increased their use of alternatives up to 25 percent since 2001, with advisors citing the need for absolute returns and access to non-correlating assets as the top two drivers of client demand. However, results of an individual investor survey reveal that three-quarters of mutual fund investors surveyed are not familiar with alternative investments, and more than 40 percent do not feel they have access to information about their potential risks and benefits.

“As a pioneer in making alternative investments like managed futures and hedge fund strategies available to the retail marketplace within open-end mutual funds, it’s essential that we provide information about how these nontraditional investments work and how they fit within an overall asset allocation strategy,” says Edward Egilinsky, managing director of alternative strategies at Rydex Investments.

“We want to equip advisors with educational material that can help them better differentiate their practices and help their clients make informed investment decisions,” Egilinsky explains.

After being given a description of alternative investments, 60 percent of investors surveyed say they would consider investing in such products if their advisor recommended them. And almost half, 45 percent, state that they would be more interested to work with a financial professional who offers alternatives.

“A difficult equity environment has more clients looking to allocate to alternative investments, which don’t necessarily move in tandem with stocks and bonds,” says Egilinsky. “As investors become more aware of the potential diversification benefits of alternatives, we expect that they will become a mainstay in retail investment portfolios.”

Janet Levaux, MBA/MA, is the managing editor of Research; reach her at [email protected]