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Cerulli: Product development for retail alternatives is on the rise: Where is the demand coming from?

Friday, March 26, 2010

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Opalesque Industry Update - Product development for retail alternatives is on the rise, but where is demand coming from? Cerulli's latest research on retail alternatives examines the product development activity spurring growth in this space and sheds light on the demand drivers.

“Most asset managers view the need for investors to optimize the risk-adjusted return of their portfolios as a significant driver behind developing these products. To some extent asset managers' conviction that alternative investments will play a key role in portfolio construction stems more from a perceived need in the market than actual demand,” explains Pamela DeBolt, lead analyst on Cerulli's latest report entitled Cerulli Quantitative Update: Retail Alternative Producsts and Strategies 2010.

Even though many investors aren’t directly demanding these products, some advisors are, and asset managers agree that alternatives are the next step for product line extension. “Our research shows that many asset managers have plans for at least some portion of their new product development to consist of these vehicles or strategies. Even so, we caution firms to focus on their core competencies, and resist the urge to be all things to all investors,” continues Cindy Zarker, director and head of Cerulli's retail asset management practice.

Cerulli's research explains that to be successful in offering retail alternatives, firms must develop a comprehensive distribution strategy that incorporates education and insight on what these strategies and vehicles are, and how to use them by advisor practice type, channel, and core market.

This is Cerulli's first annual report dedicated to the retail alternative space. It provides a comprehensive look at alternative mutual funds, ETFs, collective trust funds (CTFs), hedge funds, and structured products.

These findings and more are from Cerulli Quantitative Update: Retail Alternative Producsts and Strategies 2010. - KM - Source

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