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Bailey McCann, Opalesque New York:

The Chartered Alternative Investment Analyst (CAIA) Association has released a new report on what lies ahead for alternatives. The report notes that alternatives are expected to produce half of industry revenue in a few years, despite representing just 12% of the $153 trillion global investable market in 2020. This forecast is indicative of a shift away from passive investing and toward alternatives a move that is being driven by headwinds including inflation, volatility in interest rates, and geopolitical concerns.

"We are in the twilight of a four-decade economic super wave driven by unprecedented accommodative monetary policy by global central banks and are embarking on a new era that will have far-reaching implications for investors, fiduciaries, and other stakeholders working in or impacted by the asset management profession," said John Bowman, Executive Vice President for the CAIA Association.

CAIA argues in the report that allocators will have to respond to changing market conditions by relying more heavily on alternatives. In order to generate consistent alpha, allocators may have to get comfortable with more risk. It's unlikely that passive allocations will have the same rate of return that they have had over the last decade. Broad diversification and active management, the report argues, can make up for some of this.

The report also notes that active management isn't just about picking opportunistic strategi......................

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