When Genworth announced its acquisition of alternatives investment provider Altegris Investments last October, Gurinder Ahluwalia said the move was made in response to the expressed wish of its RIA and broker-dealer advisor clients for access to alternatives. The move has appeared to pay off.
In a media roundtable in New York on Tuesday, Ahluwalia (left), CEO of Genworth Financial Wealth Management (GWFM), mentioned that since the platform’s launch in February it had attracted $100 million in assets.
There are 12 allocation strategies on the platform, said Michael Abelson, GWFM’s senior VP of Investment and product management, and the success of the platform reflected the fact, he said, “that alternatives are becoming a more important part of advisors’ practices.”
Jon Sundt, president and CEO of Altegris, predicted that “three to five years from now, alternatives will be seen as ‘regular’—just as they are considered ‘regular’ in institutions and among the high net worth.”
The fourth member of the roundtable, Anne Lester of J.P. Morgan Asset Management’s Global Multi-Asset Group (GMAG), pointed out that for advisors building portfolios, “it’s always about asking the right question of why you’re diversifying,” and then “sizing those exposures” that provide diversification.
While many observers worried that Modern Portfolio Theory’s diversification mantra failed during the 2008-2009 economic and markets crisis, Sundt (left) pointed out that certain alternative strategies—namely managed futures, global macro, and long/short equity—“all made money during the crisis." Sundt argued that “it wasn’t the case that Modern Portfolio Theory didn’t work” during the crisis, but that investors hadn’t achieved true diversification.
Looking just at the performance of managed futures, which Sundt says displays near zero correlation with the equity markets, Sundt said that during the “lost decade” of equity returns, an investment in managed futures would have performed quite well on an absolute basis, not just beaten the equities market's return.
At Altegris, Sundt said, the company’s “80-strong” analysts looked for the best alternatives managers, who needed to exhibit long/short investing acumen, have a flexible investing mandate and be in liquid investments. Altegris is working on bringing some alternatives managers into '40 Act mutual funds, which he said have become