•  
• Tweet
•  
•  
•        Print
•  
•        Email
•  
•         Track Keywords

Nearly a quarter (23%) say their attitude towards alternatives has become much more positive while 65% say it has become slightly more positive, the research found.

The study, amongst 100 institutional investors and wealth managers across Switzerland, Germany, Italy, and the UK who are collectively responsible for £276 billion assets under management found that this had resulted in more than just positive sentiment. More than two thirds (68%) say the funds they help to manage have increased their allocation to alternatives during the past 12 months.

Of these, 11% say they their allocation to alternatives has increased dramatically. And this trend looks set to stay. Almost two thirds (63%) of professional investors see their allocation to alternatives increasing in the next 12 months with 16% of these saying they plan to dramatically increase their allocation.

MPG has seen net inflows of $30 million into its High Protection Fund, which invests in life settlements, since the start of January 2021 and $12 million in the first six months of this year. The alternative asset class has an extremely low correlation with equities and bonds, and in 2021, the High Protection Fund delivered a net annualised return of 8.25%. Net returns for the first six months of this year are 4.39%. The absolute return fund aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees.

MPG's Vita Nova Hedge Fund, which is a mutual fund that aims to achieve long term capital growth by identifying short to medium term investment opportunities with inherent pricing weaknesses and the potential to improve over time, has delivered an annualised rate of return of 22.79% and compound annual growth rate of 13.8%.

When asked why investors expect to invest more into alternatives, the top reason given by professional investors was because they can provide a hedge against inflation. This was very closely followed by providing an attractive yield and offering diversification benefits. The fourth reason given was providing strong growth in valuations and the fifth reason was lower volatility.

Alternatives rely less on broad market trends and more on the strength of each specific investment, hence, adding alternatives can potentially reduce the overall risk of a portfolio, investors say.

Jeremy Leach, Chief Executive Officer of Managing Partners Group commented: "The Covid-19 pandemic looks like it has fundamentally changed professional investors opinions of alternatives and the benefits of these asset classes. It's helped them to not only be seen in a different light, as they can provide a hedge against inflation as well as an attractive yield but has driven up allocations in the last six months. And this trend looks set to continue, with investors increasing their allocation to alternatives in the next 12 months."

MPG is a multi-disciplined investment house that specialises in the creation, management and administration of regulated mutual funds and issuers of asset-backed securities for SMEs, financial institutions, and sophisticated investors. It currently manages funds with a gross value of $500m.

High Protection Fund

High Protection Fund was launched in 2009 and is an absolute return fund that aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees. The fund offers share classes in a number of different currencies and aims to deliver returns by investing in life settlements or Traded Life Policies (TLPs) or companies that invest in TLPs.

Life settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value and are institutionally traded through a highly regulated secondary market. The market increasingly includes high profile institutional investors and service providers, including Apollo Global Management, GWG Life, Vida Capital, Broad River Asset Management, RedBird Capital Partners, Partner Re, SCOR, Berkshire Hathaway, Coventry First, Wells Fargo, Bank of Utah, Wilmington Trust, and Suisse Life Settlements LLC.

MPG's High Protection Fund returned 283.77% since it was launched in July 2009.

The standard deviation in its performance has been 0.13% since launch and its Sharpe Ratio of 3.0630 reflects its excellent consistency in outperforming the risk-free rate. The fund has no initial or performance fees which has given it a performance edge on competing funds within the life settlement sector.

Vita Nova Hedge Fund

Vita Nova Hedge Fund is a mutual fund that aims to achieve long term capital growth by identifying short to medium term investment opportunities with inherent pricing weaknesses and the potential to improve over time. The fund's investment management team may rely on economic forecasts and analysis in respect of interest rate trends, macroeconomic developments, global imbalances, business cycles and other broad systemic factors to identify pricing weaknesses with the potential to strengthen over time.

Where the Manager identifies value opportunities it has the ability to use gearing to over invest wherever possible whilst preserving liquidity to afford relatively quick changes to the portfolio weighting and to take advantage of short-term arbitrage and alpha opportunities.

Vita Nova Hedge Fund may hold other investments including cash or near-cash assets, units or shares in other collective investments schemes, listed securities and registered companies.