Global macro funds and global tactical asset allocation mutual funds are the most popular type of retail alternative funds among financial advisors, according to a new report.
Ignites Distribution Research unveiled this finding in a new report, which polled the Financial Times Top 400 advisors—a list of elite advisors at national, regional and independent broker-dealers with the average advisor managing more than $1.3 billion in assets.
Nearly a third (32.9 percent) of the FT400 advisors plan to start or increase usage of global macro and tactical asset allocation funds within the next six months. The next four most popular retail investment alternatives include long/short equity, multistrategy, long/short debt and event driven investments.
The survey adds that while retail alternative funds make up 3.0 percent of fund industry assets, the FT400 advisors have 8.4 percent of fund assets in these products, including in global asset allocation, commodity, long/short and currency funds.
The survey indicates that more than 80 percent of the FT 400 work in teams, a growing part of the business; and more than two-thirds of the money managed by FT 400 advisors are in accounts charging asset-based fees for advice, a business model that has overtaken commission-based accounts.
“The FT 400’s greater use of retail alternative funds reflects the fact that top advisors are more comfortable with risk management and more certain in their convictions,” said Jesse Mark, senior research analyst and the report’s author. “FT 400 advisors, with an average of 26 years’ experience, are early adopters of retail alternative funds that provide less-correlated exposure.”
More than 26 percent of FT 400 advisors are looking to increase allocations to three more retail alternative strategies in the next six months, the survey states. And less than 9 percent of the advisors go into a wholesaler meeting to discuss a new product without doing prior research and analysis.