Institutional investors have long benefitted from allocations to alternatives. Now, individual investors and advisors are gaining interest and access to the space, too. Before taking the plunge, read up on some of the recent trends, challenges and opportunities in the alternatives markets.
Before the global financial crisis, it was conventionally believed that equity risk originated in a finite number of well-defined, systematic factors. But, these explanations didn’t justify how equities behaved in certain market environments following the crisis. Stocks were behaving in seemingly unpredictable ways.
The non-U.S equity markets have been experiencing a difficult stretch. The results of which, combined with concerns about Europe, have led many investors to contemplate reducing or abandoning non-U.S. stocks in their portfolio. While avoidance may seem like a “safe” play, the validity of this decision needs to be questioned.
Several recent surveys, including our own June 2012 Financial Professional Outlook, point to investor uncertainty about the markets and a general mood of pessimism about their financial prospects for retirement. It seems these concerns about retirement are not only a domestic issue either.
With over 20 years of experience working with advisors and their clients, I know a thing or two about giving and receiving professional, thoughtful, unemotional counsel. But it sure is a different feeling when the “doctor” becomes the patient!
The extreme market volatility of the past four years has left many advisors and their clients wondering how to best adapt to the new environment. In our view, a careful balance of seizing new opportunities and actively managing risks is key to improving portfolio outcomes in the future.
As Edna, the designer in the Pixar Animation Studios’1 animated hit “The Incredibles” clearly points out: “Words are useless dahhhling….Gobble, Gobble, Gobble!” It is a truly funny moment when Edna emerges from retirement to show off her new superhero designs. The moment works because we all have been in a situation where words just can’t and don’t exactly convey what we are trying to say.