Some institutional investors are once again embracing alternatives in a bid to boost returns as the global recession is believed to be reaching a turning point. In Europe, the City of Stockholm Trust Fund, ING Australia, Cadbury Schweppes Pension Fund and Intertek U.K. Group Pension Scheme are increasing their allocation or investing for the first time.
Traditional investment strategy diversification failed to protect investors during the global financial crisis, says Alan Flynn, business leader of Mercer’s investment consulting business in Asia ex-Japan. Despite the near-term correction in many equity and bond markets, events such as the recent crisis “typically reverberate for decades, not months,” says Andrew Karsh, portfolio manager at Credit Suisse. He adds that with interest rates remaining low, return expectations for equities and bonds will drop, as will the opportunity cost of keeping physical assets. Karsh sees this as a chance for commodities to shine.
— Global Money Management