Alternative investments are playing an increasingly important role in asset allocation, according to a new survey of financial professionals.
Rydex|SGI, Rockville, Md., a unit of Security Benefit Corp., Topeka, Kan., commissioned a survey that attracted responses from 100 registered investment advisors and 97 broker-dealer representatives from November 2009 to December 2009.
About 81% of RIAs and 78% of brokers believe diversification is the main driver of alternatives usage, the researchers write.
Alternative investments include nontraditional exposures such as managed futures and long/short commodities in mutual fund structures. Alternative investment mutual funds use tools such as leverage, derivatives and short selling.
Most of the advisors already employ alternatives in client portfolios, the researchers say, but 8% of RIAs and 16% of brokers say they have "little familiarity" with alternatives and, overall, they want additional education regarding the investments.
The firm says it is planning to introduce a new tiered educational program for advisors. The program will include an introduction to alternative investments and cover implementing alternatives in a portfolio, selecting alternative products, and other topics.
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