alternative investment

Large and institutional investors, such as pension funds, insurers, family offices and endowments, have increased their allocations to alternatives in 2016 and are seeking diversification within alternatives, which should be positive for insurance-linked securities (ILS) funds.

The world’s pension funds continued to push more deeply into alternative investments in 2016, as asset classes which offer diversification continue to prove very attractive to a growing sector which now commands a total of $36.4 trillion of investments at year-end 2016.

Financial market and securities industry regulators are increasing their focus on investment fund liquidity, as they aim to reduce the risk that in times of stress or crisis fund manager’s are better able to manage liquidity risk and honour investor redemptions.

John Brynjolfsson, who recently announced the shuttering of his own investments firm Armored Wolf and its conversion into a family office, is to join James Alpha Advisors to continue managing its James Alpha Global Enhanced Real Return Fund (GRRIX) strategy.

Insurance and reinsurance companies are at their most pessimistic on the prospects for the industry, according to the results of a survey undertaken by Goldman Sachs Asset Management, as low investment returns take their toll.

A study undertaken by Conning alongside the American Council of Life Insurers (ACLI) found that life insurance companies could look to invest in alternative asset classes such as ILS as a way to add diversification, while reducing sensitivity to interest rates.

Institutional investors are set to increase their allocations to investment strategies which fall into the ‘liquid alternatives’ classification, which typically means a UCITS or 40 Act strategy investment fund, neatly fitting the mold of some catastrophe bond and ILS funds.

A significant number of pension funds show an increased appetite for investment risk and alternative asset classes, according to State Street, which could result in more allocations to insurance-linked securities (ILS) or reinsurance linked investments,

One of the factors that is responsible for assisting the rapid growth of the insurance-linked securities (ILS) and reinsurance-linked investments market in recent years is global investors continuing shift towards alternative asset classes.

For many investors a high return is not the only reason for looking at alternative asset classes and hedge funds. Research shows many only seek a 4% to 6% return, information that will comfort the insurance linked investment market at a time of softer prices.