He adds: “Alternatives can have much lower correlations to traditional asset classes, which means their risk as an element of the overall portfolio is reduced.”
While Mr Cockerill believes that understanding the underlying portfolios in their positioning, process and aims would deal with any potential correlation issues, he says alternatives to fixed income are hard to find as bonds are held for income.
He notes that commercial property, categorised as alternative, is used as it provides an income and has low correlation with other asset classes.
Joanne Ellul is a freelance journalist
Advisers and DFMs
A recent study by Investec Wealth and Investment reveals quality of service is the most important factor among 67 per cent of advisers when deciding to appoint a DFM.
Head of intermediary services Mark Stevens says: “Successful advisers know only too well the importance of providing a high-quality service to their clients and it follows that they expect a similar focus in this area among their DFM partners.”
Advisers also highlighted the following factors as important when choosing a DFM:
54% Consistent investment performance
51% Value for money
42% Transparency of charges
42% Cost of management
