More than 90pc of financial advisors allocate to alternative investments
Nine in 10 financial advisors currently incorporate alternative investments in client portfolios, according to a survey by alternative investment platform CAIS and Mercer.
Furthermore, the firms’ third annual independent survey found that 91 per cent of financial advisors are planning to increase allocations over the next two years.
Five in 10 advisors now allocate more than 10 per cent of client portfolios to alternatives, while more than three-quarters (76 per cent) allocate at least five per cent.
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The survey also revealed that advisors are looking for more streamlined ways to access and allocate to alternatives, with 77 per cent indicating a preference for model portfolios.
Advisors cited portfolio construction tools (54 per cent) and model portfolios (47 per cent) as their top resources to simplify the alternative investment process, and the majority (2/3) said they are more likely to consider registered funds than private funds.
“Responses from the advisor community illustrate the evolving advisor sentiment around alternatives from optional components to pillars of a portfolio,” said Neil Blundell, chief investment officer of CAIS Advisors. “We’re seeing a seismic shift in demand as advisors increasingly recognise the diversification and growth potential alternative investments provide.”
According to the survey, two-thirds (66 per cent) of advisors regard platform integrations as their most valuable technology feature, closely followed by analysis tools (60 per cent), emphasising technology’s role in centralising alternative investment processes.
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“The findings underscore the importance of equipping independent advisors with the same high-quality resources and due diligence capabilities that institutions have benefitted from,” said Gregg Sommer, partner and US financial intermediaries leader at Mercer. “By providing due diligence and monitoring for funds on the CAIS platform, Mercer empowers advisors with research and risk management insights that extend far beyond the investment itself, helping them build differentiated portfolios with confidence and conviction.”
The survey also highlighted shifting preferences and emerging trends across alternative asset classes. Advisor interest in structured notes showed significant growth, with 38 per cent planning to increase allocations this year – a notable rise from 27 per cent in 2023.
Private debt (89 per cent), private equity (86 per cent), and real estate (85 per cent) remain the top asset classes advisors are currently allocated to.
Additionally, nearly four in 10 advisors (39 per cent) indicated that tax-advantaged strategies are among the top themes they would like to present to their clients this year, followed by infrastructure (28 per cent) and artificial intelligence (28 per cent).
The survey was conducted between 10 September and 18 October 2024, and the results are based on responses from 550 financial advisor respondents.
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