Active management, alternatives and strong partnerships fuelling alpha generation
Advisers remain optimistic active management can deliver outperformance despite rising inflation, interest rates and ongoing market volatility. As investors feel the squeeze of the rising cost of living, active management is the go-to strategy for advisers aiming to outpace inflation and benchmarks.
Praemium’s latest research with CoreData asked advisers to nominate their top 3 approaches for generating alpha, with ‘active management and rebalancing’, ‘active stock selection’ and ‘partnering with asset managers’ topping the list.
Alternatives continue to gain traction among advisers seeking outperformance, with 21% citing the sector as one of their top 3 approaches to generating alpha. HNW-focused advisers were the most likely adviser segment to leverage alternatives.
Infrastructure, private equity, and private debt are the assets of choice for advisers seeking benchmark-beating returns and portfolio diversification for their clients. Access to a broad range of investment options was noted as critical, with 40% of advisers surveyed stating this was essential for generating alpha.
The research also highlighted advisers need top-tier support to excel in this demanding environment. Platforms and licensees provide critical resources that elevate advisers' ability to generate alpha and achieve superior outcomes. Platforms provide access to a breadth of investment opportunities and offer scenario modelling, benchmarking tools and detailed performance analysis to help make better investment decisions. Whilst Licensees are pivotal in providing the research, tools, and education advisers need to inform their analysis.
Praemium’s Chief Strategy Officer Denis Orrock commented that “With the complexities of today's financial markets, there's a tremendous opportunity for platforms, asset consultants, and licensees to work together to provide the crucial support advisers need to generate alpha. Praemium has an extensive investment menu and the most alternative assets of any platform providing advisers access to a wealth of investment opportunities. We also provide a comprehensive suite of tools that enhance decision-making and investment strategies. “
When leveraging the strengths of a platform partner and the expertise of licensees and asset consultants, advisers are more empowered to navigate the challenges of inflation and market volatility effectively and deliver superior outcomes for their clients.
“Our research demonstrates that in a landscape where informed, agile decision-making is key to success, choosing the right partners is more vital than ever," Mr Orrock said.