As published on hedgeweek.com, Thursday 16 April, 2020.
The Chartered Alternative Investment Analyst (CAIA) Association has issued a four-point call to action for the alternative investment industry practitioners as part of a new report on the future of alternative investments.
The Next Decade of Alternative Investments: From Adolescence to Responsible Citizenship, also includes a wealth of data on the growth of the space, plus insights into where alternatives are heading in the decade to come.
The paper, which began development in early 2020, is particularly timely in the current climate as the global economy and investment community are seeking stable footing in the midst of the still-unfolding COVID-19 pandemic.
CAIA's four point action plan calls on practitioners to –
• Commit to Education;
• Embrace Transparency;
• Advocate for Diversification; and
• Democratise, but Protect.
“The human and economic pain of this ongoing crisis is striking. Health of body and soul is certainly everyone’s top priority, but those with a fiduciary duty must also find a way to prioritise the ways in which they can help balance or mitigate the ongoing economic risks of these unprecedented times,” says William J Kelly, CEO of the CAIA Association. “Finding that balance is something CAIA can help with and is where this report is focused.
“The dozen years since the Global Financial Crisis, when so many markets were moving up in lockstep, perhaps gave investors a false sense of security and caused them to be less focused on such key concepts as diversification, volatility, price discovery, and liquidity; COVID-19 has brought them all back into play with shocking swiftness."
The Next Decade of Alternative Investments provides compelling research and a look back on the past 15 years of alternative investment industry growth, augmented by the results of a survey CAIA recently undertook of its global Membership. The report also includes case studies and other data that provide crucial new insights into what has been driving the growth of alternatives and what factors are likely to drive continued growth, and expose potential growing pains, in the decade to come.
According to the report, with alternatives having ended the last decade representing approximately 12 per cent of the global investable market, CAIA’s Members expect that share to grow further in the 2020’s, reaching as high as 24 per cent.
Global trends in issuance meanwhile, even before the COVID-19 pandemic, were driving investors to private markets, a trend that is likely to accelerate in the decade to come, and something that will likely force regulators around the world to address the perceived inequities this is creating.
“Though we are all understandably thinking in the short-term right now, long-term context is important for us to help ensure we deliver on investor outcomes,” says John Bowman, Senior Managing Director for the CAIA Association. “By advocating with capital allocators, asset managers, regulators, and our global membership on this call to action, we believe CAIA Association has a leadership role to play in preparing a stronger future on behalf of savers and beneficiaries."