Alternative Investment Conference Spotlights Managed Futures

We just couldn’t get enough of the conference action last week with the NIBA and the CTA Expo, and spent the beginning of this week exploring what the “Alternative Investments Conference” has to offer. Here are some highlights from day one yesterday:

In her conference opening presentation, Demystifying Alternatives: The ABCs of Alternative Assets, Strategies and Vehicles, Nadia Papagiannis of Morningstar Inc. suggested that alternative investments should receive a larger portion of portfolio allocation (we covered that a while back, why you’re not happy):

 “Five percent is really not going to make a difference” said  Ms. Papagiannis on Monday, “but 20% will start to make a difference.”

“If I were doing it, I would pick an equity long-short strategy, a managed-futures strategy and a market-neutral strategy as a kind of bond substitute, and I would equal-weight them into the portfolio,” said Papagiannis. “Prior to 2008, a lot of investors were too heavy into equities, and now a lot of advisers are telling me their clients are too heavy into bonds.”

As part of a panel discussion entitled The Alternative Asset Allocation Model, Steve Medina, Head of Global Asset Allocation & Senior Portfolio Manager at John Hancock suggested advisers should look to balance their portfolio better by funding an alternatives allocation half from equities and half from bonds.

“If you fund alternatives 100% from bonds, you’ll get better returns but get an increase in risk,” said Medina. “If you fund 100% from equities, you will reduce the overall risk, but there’s a cost to that and you will hold back a little bit of total return over time. Therefore, start with the concept of funding half from equities and half from fixed income.”

Due diligence was another popular topic on day one. According to David Lafferty, an investment strategist at Natixis Global Asset Management, most investors follow one of two different approaches with regard to due diligence.

“There are those people who are looking for great returns, and they will pay a lot of attention to a track record even if they don’t fully understand the strategy. And there are those who will like the story and the strategy, and they don’t care as much about the track record,” said Lafferty.”

Members of the Attain team are over there again today for Day 2 and we’ll bring you more tomorrow.

 

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