It’s a brave new world for investors, according to Natixis Global Asset Management president and CEO John Hailer. Amid the market volatility that has spiked this year, investors need alternative investments that are uncorrelated to the markets in order to build what Hailer calls “durable portfolios.”
But a sizable number of investors are not interested in alternatives, Natixis found in a survey of 463 investors. While 47% of investors are worried that market volatility will hurt their savings, 40% are not interested in alternatives. Eighty percent said the financial crisis of 2008 is still taking a toll on the markets, and 66% said they have lower expectations about future investment returns.
“Our goal is to build a stable of alternative investments that help manage risk,” Hailer said. “Investors need better tools to manage risk and lessen volatility." Asset managers "need to think of an investment portfolio as something that holds up in all kinds of investment climates,” Hailer continued. “We value durable cars and durable furniture. We also should value durable investment portfolios.”
The survey also showed that only 49% said they have either a moderate or very good understanding of their portfolio’s risk, and 70% said they either had minimal or no firm grasp of alternative investments. Even among high-net-worth investors, nearly 40% said they don’t understand alternatives.
--This article first appeared on Money Management Executive