Boston, MA (PressExposure) May 19, 2011 -- Alternative Asset Analysis (AAA), an advocacy and analysis group that encourages the take-up of alternative investments, has welcomed news that alternative funds have become much more popular among mainstream investors.
Investment research firm Morningstar has found that investments in alternative mutual funds have increased significantly as clients put the pressure on financial advisers to reduce risk.
Some $25 billion in investment have been ploughed into alternative mutual funds and exchange-trade funds in the last year alone. As a result of the strong past 12 months, there are now 540 such funds with $151 billion invested in total.
John Rekenthaler, the Vice President of Morningstar, said, "It's clear that alternative funds are here to stay."
So why are they so popular at the moment? AAA's Anthony Johnson explained, "Alternative investments allow investors to spread risk within their portfolio as alternative assets rarely follow the same patterns as stocks and shares or bonds."
He added that clients are increasingly asking their financial advisors to find a way of making them a return on their investment while protecting at least some of their cash should another economic slump occur.
"Alternative assets are the way forward for cautious investors, or simply for those who want to try investing in more environmentally and socially sustainable projects.
"There are an increasing number of ethical alternative assets to invest in, including sustainable forestry projects in Brazil, such as those run by Greenwood Management. There are also socially responsible investment projects going on in Africa, many of which are attracting huge investments from major funds," added Johnson, who has years of fund management experience in both the US and the UK.
One short fund manager, Rick Cortez, who is the president of Distribution for Broadmark Asset Management, said that larger investors such as pension funds and university endowments are now looking to alternative funds to keep risk manageable. Gone are the days, it seems, when investors viewed alternative funds as an expensive option that generated little return on investment.
"Alongside the risk averse nature of alternative assets, they will also bring strong returns - often outperforming equities during tough economic times, which let's face it, we are still living in," added Johnson. PressRelease Distribution By PressReleasePoint