CHICAGO, Jan. 18, 2011 /PRNewswire/ -- Morningstar, Inc.
(Nasdaq: MORN), a leading provider of independent investment
research, and Barron's, the financial magazine published by
Dow Jones & Company, today released highlights of their
third-annual national survey examining the perception and usage of
alternative investments among 151 institutions and 669 financial
advisors.
"Overall usage of alternatives continues to increase among both
institutional investors and advisors, but the vehicles they're
using to implement these strategies are changing," said
Nadia Papagiannis, alternative
investment strategist for Morningstar. "We've seen $2.7 billion flow out of the hedge funds we track
through the third quarter of this year, yet $17.3 billion has flowed into alternative mutual
funds. Investors seem to want the best of both worlds when they can
get it—the diversification benefits of alternative strategies with
the liquidity and transparency of publicly traded vehicles. And the
investment industry is responding to this demand. Alternative and
commodity mutual funds accounted for 14% of all funds launched in
2010 and 20% of all ETFs."
Among the major survey findings:
Current and Future Usage of Alternatives
- More than 70% of institutions expect alternatives to account
for more than 10% of their portfolios over the next five years; 37%
(up from 25% last year) expect their portfolio allocation to
alternatives to exceed 25%.
- Again this year, more than half of advisors surveyed expect to
see their clients' allocations to alternatives grow by more than
10% a year over the next five years.
- More than 21% of institutional investors indicated that
long-short strategies represent their largest alternative
allocation, and it was the strategy most commonly cited for
possible future investments. Managed futures was most commonly
cited by advisors as the strategy that they intend to consider for
investment going forward, and it was the second most commonly cited
strategy by institutional investors.
- Institutional investors have adopted traditional mutual funds
and ETFs to implement more liquid alternative strategies, but
continue to use hedge funds to access less liquid strategies like
arbitrage, corporate actions, and distressed securities. Advisors,
on the other hand, are primarily using liquid investment vehicles
to access all alternative strategies.
Definitions of and attitudes toward
"alternatives"
- The importance of alternatives continues to increase. More than
70% of the institutions surveyed (up from 63% in 2008 and 64% in
2009) and 66% of advisors (up from 52% in 2008 and 58% in 2009)
believe that alternatives will be as important or more important
than traditional investments over the next five years.
- Over the past three years, institutional investors have
significantly changed their perception of natural resources
equities. In 2008, about 80% of institutional investors surveyed
considered them alternative investments, but less than 30% would
put them in that category today.
Hot topic findings
- Advisors were fairly evenly split in their opinions about the
SEC's proposed Accredited Investor rule change—56% agreed and 44%
disagreed with the rule change. The proposal would exclude primary
residence in determining net worth, and potentially limit the
access of some clients to private, less-liquid alternative
investment vehicles such as hedge funds.
- There was general strong agreement among both advisors and
institutional investors that commodity returns are currently being
driven more by demand than fundamental valuations.
- The majority of institutional investors did not receive any fee
concessions in the last year, as hedge funds that survived the 2008
downturn retained pricing power.
Morningstar and Barron's conducted the Web-based survey
in late November through early December
2010. Survey results appear in the Jan. 17 issue of Barron's and online at
Barrons.com. Additional results, including charts, can be viewed
online at http://global.morningstar.com/2010Alternatives.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment research in North
America, Europe,
Australia, and Asia. The company offers an extensive line of
Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar
provides data on approximately 370,000 investment offerings,
including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 4 million equities,
indexes, futures, options, commodities, and precious metals, in
addition to foreign exchange and Treasury markets. The company has
operations in 26 countries.
About Barron's
Barron's (www.barrons.com) is America's premier financial
magazine, renowned for its market-moving stories. Published by Dow
Jones & Company since 1921, it reaches an influential audience
of senior corporate decision makers, institutional investors,
individual investors and financial professionals. With new content
available every week in print and every business day online,
Barron's provides readers with a comprehensive review of the
market's recent activity, coupled with in-depth, sophisticated
reports on what's likely to happen in the market in the days and
weeks to come. As a result, Barron's is the financial
information source these powerful people rely on for market
information, ideas and insights they can use to increase their
professional success and enhance their personal, financial
well-being.
©2011 Morningstar Inc. All rights reserved.
Media Contact:
|
|
Alexa Auerbach, 312-696-6481
or alexa.auerbach@morningstar.com
|
|
|
MORN-R
SOURCE Morningstar, Inc.