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Alternatives steadily luring cash from institutions

By Leena Dagade

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Investor appetite for alternative investments has steadily increased over the past few years, led by greater allocation towards the asset class by institutions, according to new research.

The study, by Boston-based Cerulli Associates, revealed that in Asia ex-Japan, alternative mutual fund assets under management were US $21 billion at the end of September last year, about 6.1 percent higher than the end of 2012.

The 6.1 percent growth is part of a pattern of increased allocation to the asset class over the past few years, which has seen AUM in the alternative space growth from just under US $19 billion in 2009.

Cerulli Associates said these allocations have primarily been driven by institutional and, to some extent, high-net-worth investors, rather than retail investors.

According to the report, institutional interest is underpinned by a burgeoning asset base and an increasing need for portfolio diversification, potentially higher yields, stable income, and as an inflation hedge. However, despite these underlying drivers, Cerulli said the path of institutions toward alternatives will likely remain slow.

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