Alternative investment strategies for 2020

Post-recession the deterioration in confidence in economy has prompted trades and multilateral organizations to operate differently. Global trade tension rose post G7 summit, while, the head of the International Monetary Fund (IMF), Christine Lagarde said “the clouds on the horizon – are getting darker by the day”. This was the reaction to the tension between the US and its allies.

Economists believe these economic changes can cause slump by 2020.  This prediction has been made at a time when the Federal Reserves are increasing rates, unemployment is falling, and inflation increasing and things are improving. Falling unemployment and increase in wages supports inflation and increase in asset prices.

Previously, there had been unprecedented volatility in economic conditions, which are forcing governments to make regulatory changes to reduce risks as most unwarranted expansions are vulnerable to market bubbles. In the past decade, 2001 busted dotcom bubble and 2007 housing bubble.

The future of alternative investment management is positive, as the assets which lost in 2008 were able to recover in 2010 to 2012.  Some new ideas and skills are needed to offer the increasingly complex global industry’s best investment portfolio.  The upcoming strategies in alternatives investments should not have prices based on market shifts. Post-recession portfolio manager are suggesting diversification in assets where the performance of alternative investment is market neutral and has a zero market risk.

The role of technology in alternative investments

The best thing about 2020 is increased transparency in trade. New legal changes leading to investor disclosure, new distribution channels, increased interaction with investors, change in compliance and technology support, promotes effectiveness of the market.

Diversification in different products and shift to traditional areas reduces risks.  Managers are offering portfolio based data incorporating risks accurately. 

Increased communication and linkage for easy trade will be required between various regions, countries and geographical locations in the coming years.

Technology and latest data collection devices can enable investors to get real-time access to any geo-location data related to any asset.  This will include the market data and the latest regulatory oversight of the markets as well as the products. Most institutional investors will provide portfolio level data and cross border information. Higher transparency will prevail across all the sectors involved in global trading.

In 2020, alternative will be mainstream tool as the traditional methods of investments are transforming and vigorously being scanned through severe economic factors.  The new strategies will be based on tackling risks of economic crisis and providing options for long- term accumulation of money and assets.

Infrastructure pressure will increase in coming years as the global population in cities is expected to grow by 75 per cent in 2050 where the demand for housing, employment, health and education will grow. The asset managers will have to fund innovative products for cross boundary diversified population in cities. 

In the coming years, products with a low-risk to meet the retirement needs will be introduced in alternative classes.

To know more, get our Alternative Investment Guide based on some of the future strategies at 99Alternatives (www.99alternatives.com).