The demand for alternative funds for retail platforms and retail investors in Australia has more than doubled across the last year.
According to a report into alternative asset class activity by investment research company Cerulli Associates, Australian investor demand has grown in size by more than one and half times – a trend that Cerulli says has also been seen in other Asian markets.
Cerulli said that due to investors seeking “higher, uncorrelated returns”, alternative funds in Australia saw a net inflow increase of more than 1.5 times of retail alternative assets under management rose hitting AUS$8.1bn (US$6.2bn) by the end of 2015. The statistics were taken from the start of 2014 through the end of 2015, according to data from Morningstar.
However, despite the general increase trend, at the end of the first quarter of this year, the retail alternative assets in the region fell to AUS$7.8bn, a drop that Cerulli believes is down to Australian investors being “spooked by the poor start in global markets this year, prompted by circuit breakers being activated in China”.
Global market volatility
A spokesperson for the firm said that investors may have decided to “cash in” on gains from their alternative funds, and “ride out the global market volatility on the sidelines”. However the brief drop in assets is not something that Cerulli expects to continue
At the end of 2015, about 12.6% of total retail fund assets under management in the region was made up of investments outside Australia.
The spokesperson added: “Looking into sources from both Morningstar and Broadridge Financial, there are more pockets of opportunity for overseas alternative funds than those invested into Australia, and the proportion of total retail fund a should rise by the end of 2016.”