“The world of alternative investments has long ceased to be considered a specialised, marginal category and is now an integral element of a modern, diversified portfolio,” Nektarios Papagiannakopoulos, Alternative Investments Head, Alpha Asset Management MFMC says.
Speaking at the 16th Pension Forum presented by AON, he analysed international developments, as well as the rapidly evolving Greek landscape in alternative investments.
As he explained, global markets have moved well beyond the traditional 60/40 model between stocks and bonds. Higher correlations between traditional categories and “richer” valuations have turned the spotlight on alternative assets, which are no longer a niche option, but a key pillar for optimising diversification and returns. It is no coincidence, as he noted, that the European AIF industry now reaches €8.2 trillion in NAV, representing over a third of the European collective investment market.
Papagiannakopoulos said that the growth of alternative investments is directly linked to the prolonged environment of low real interest rates, which has strengthened the search for non-traditional sources of income. Institutional investors, such as pension funds and endowments, have systematically increased their placements in private markets, creating a virtuous cycle of growth and further inflows.
He also made special reference to the nature of the risks that accompany the category. Limited liquidity, longer holding periods and stricter participation requirements make alternative investments suitable mainly for investors with a long-term horizon and higher investment understanding. At the same time, the lower transparency of valuations, although able to act as a protection against short-term market noise, is often a subject of discussion with potential investors. The risk of selecting a manager, combined with the wide dispersion of returns, makes professional assessment even more critical.
In closing, he underlined that the successful integration of alternative investments requires clear alignment with the investment profile, risk tolerance and time horizon of each investor, elements that also determine the real benefit of this dynamically growing category.
(Source: InBusinessNews)
