Investec Wealth & Investment (IW&I) has raised its allocation to alternative investments, as it believes less correlated investments will provide greater opportunity over the next 18 months.
IW&I, a South Africa headquartered wealth management service provider, seeks more balanced portfolios by investing in alternative investments such as hedge funds, absolute return funds and defensive structured products.
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The wealth management company has advised its clients to switch to alternative investments as the price of fixed income assets rises.
IW&I’s Asset Allocation Committee (AAC) has recommended raising the allocation to alternatives by 2%, at the same time as decreasing exposure to index-linked gilts and cash by 1% each.
IW&I has just over £25bn AuM in the UK, with the switch equating to an increase of approximately £500 million in client funds into alternatives.
Chris Hills, chief investment officer at IW&I, said: "Alternatives have become increasingly attractive compared to other options offering ‘insurance protection’ in client portfolios. Despite a choppy start to the year, our risk outlook remains unchanged. We believe that reflation is the most likely outcome over our investment time horizon as opposed to deflation or stagflation."
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By GlobalDataHills added that once Europe’s near-term political issues are put to rest, "economic growth is expected to become more broadly based and earnings are anticipated to grow solidly".
