Alternatives a buffer for volatile markets, says Man Group

The recent volatility in share markets has reinforced the role of alternatives in providing diversification and reducing overall SMSF portfolio risk, says one alternative investment provider.

Man Group chief executive Sandy Rattray said diversification is an important factor that investors should consider when they build their portfolios, especially if they are concerned about volatility.

“The recent market downturn has been a reminder to investors of a lesson that we learnt all too well during the global financial crisis: to protect investments during downturns, investors need to consider more than just a portfolio consisting of equities and bonds,” said Mr Rattray.

“Alternatives can often deliver low correlation with traditional assets, potentially providing diversification benefits and improved portfolio efficiency,” he said.

“Trend-following strategies in particular have the capability to benefit from falling prices, which can help defend investment portfolios during market disruptions.”

Following a slow recovery after the global financial crisis, there has been heightened interest among investors for attractive ways of earning money in market downturns, he said.

“Beyond diversification benefits, investors are also realising the benefits of alternatives to capitalise on any market opportunity to improve performance potential and consistency,” Mr Rattray said.

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