Despite six straight years of equity market gains, alternative investments – both liquid and traditional – continue to be one of the fastest growing asset classes.
Nowhere is that more true than in the wirehouse channel.
According to a Money Management Institute report, Distribution of Alternative Investments Through Wirehouses, wirehouse-associated traditional and liquid alternatives through retail channels increased from $172 billion at the close of 2013 to $205 billion during 2014.
This “came as somewhat of a surprise to some in the industry because it occurred in the sixth consecutive year of positive returns for equities and amid unexpectedly resilient bond markets,” according to the report.
Wirehouse assets in liquid alternative mutual funds and ETFs stood at $102 billion at the close of 2014, an increase of 15% from $88 billion at year-end 2013.
“This was more than twice the industry growth of 7.3%, an indication of the leading role wirehouses have played in fostering the adoption of alternative investments,” according to the report.
The report, which is based on mutual fund and ETF data collected by MMI and Dover Financial Research from the four major wirehouse firms for year-end 2014, evaluates retail alternative investment trends in the wirehouse channel and analyzes the factors driving wirehouse advisors and their clients to embrace alts.
One of those factors is how goals-based wealth management has had a big impact on wirehouse assets in alternatives.
“This surprisingly robust growth — albeit over a relatively small base — is due in large part to advisory solutions sponsor firms and investment managers using alternative investments to achieve specific portfolio outcomes, particularly those that align with goals-based wealth management,” according to the report.