Financial advisors are shunning traditional diversification and portfolio construction for sexier alternative investment strategies, according to a study released today by Natixis Global Asset Management.
Most notably, the study found that a majority of advisors (63%) do not believe in, or are unsure of the value of, long-term buy-and-hold strategies, and 77% say their clients are questioning this approach as well. A majority of advisors (64%) say they are inclined to employ alternative investment strategies even for their mass-market clients, those with $200,000 to $300,000 in investable assets, and 49% said they regularly employ alternative investing strategies across their client base, with 79% saying they do so to improve diversification, 68% to reduce risk, 51% to enhance returns, and 42% to dampen volatility.
“Advisors understand the importance of building more durable portfolios that are designed to do well in both up and down markets, and they are tackling the correlation across asset classes by incorporating alternative investments,” stated John T. Hailer, president and chief executive officer, Natixis Global Asset Management – The Americas & Asia
The study, released by NGAM through its Durable Portfolio Construction Research Center, is based on a nationwide survey of 163 advisors at 150 advisory firms that collectively manage some $670 billion in assets.