Most financial service professionals now include or are looking to incorporate alternative investment vehicles into their clients’ portfolios, according to new research. So concludes Cerulli Associates in its study, “Alternative Products and Strategies 2014: Identifying Opportunities in a Dynamic Investment landscape.”
The annual report examines the market for alternatives within the U.S. retail and institutional market segments. The research attributes growing demand for alternative investments — asset classes other than stocks bonds and cash, such as precious metals, private equity and commodities — to several factors. Among them: increased interest in the vehicles by both institutional investors (57 percent of those surveyed by Cerulli) and financial advisors (52 percent). A majority of distributors (55 percent) also are eyeing the vehicles.
The report adds that advisor-recommended portfolio allocations devoted to alternative mutual funds range from 5 percent to 25 percent, depending on clients’ risk tolerance, though the average remains in the low single digits.