Survey Finds Continued Optimism About Alternative Investments Among
Institutions and Financial Advisors Despite Questionable Performance in 2008
CHICAGO, Nov. 16 /PRNewswire-FirstCall/ -- Morningstar, Inc. (Nasdaq: MORN), a
leading provider of independent investment research, and Barron's, a premier
financial magazine published by Dow Jones & Company, today released highlights
of their second annual national survey examining the perception and usage of
alternative investments among institutions and financial advisors.
"One of the most interesting findings from our survey is that both
institutions and advisors continue to view alternative investments
optimistically, despite their questionable performance, correlation, and
liquidity during last year's global downturn as well as the high-profile
scandals that rocked the hedge fund industry," said Steve Deutsch, director of
the pension, endowment, and foundation database at Morningstar. "Again this
year, the majority of participants indicate that they plan to increase
allocations to alternatives, but with greater scrutiny and due diligence given
to those investments."
Among the survey findings:
Current and Future Usage of Alternatives
-- More than 60% of institutions and advisors believe that alternatives
will be as important or more important than traditional investments
over
the next five years.
-- The majority of institutions and advisors expect alternatives to
account
for more 10% of their portfolios over the next five years; a quarter
of
institutions expect alternatives to account for more than 25% of their
portfolios.
-- Hedge funds were the most popular alternative vehicles over the last
five years, and institutions and advisors expect to continue to
increase
allocations to hedge funds over the next five years.
Motivation and Hesitation
-- For both institutions and advisors, the top three reasons for
investing
in alternatives remain the same as in last year's survey: portfolio
diversification, absolute returns, and exposure to different
investment
techniques, like arbitrage or shorting.
-- Institutions and advisors are much more concerned, however, about lack
of liquidity and transparency than they were last year.
Definitions of "alternative"
-- Compared to the 2008 survey, fewer institutions and advisors view real
estate investment trusts and commodities as alternative asset classes.
-- Both institutions and advisors tend to classify investments as
"alternative" based on the investment's strategy, i.e. absolute
return,
rather than the investment's designation, i.e. mutual fund versus
hedge
fund.
"Perhaps most important for investment consultants, advisors, and money
management firms to note is the survey once again found that overall both
institutions and advisors want the benefits of alternative strategies with the
positive characteristics of traditional investments--low correlation with
liquidity, absolute returns with transparency, and redemptions without
restrictions," Deutsch added.
Morningstar and Barron's conducted the Web-based survey in late September
through early October 2009; 89 institutions and 300 financial advisors
participated. Survey results appear in the Nov. 9 issue of Barron's and online
at Barrons.com. Additional results, including charts, can be viewed online at
http://global.morningstar.com/2009Alternatives.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in
North America, Europe, Australia, and Asia. The company offers an extensive
line of Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar provides data
on more than 325,000 investment offerings, including stocks, mutual funds, and
similar vehicles, along with real-time global market data on more than 4
million equities, indexes, futures, options, commodities, and precious metals,
in addition to foreign exchange and Treasury markets. The company has
operations in 20 countries and minority ownership positions in companies based
in two other countries.
About Barron's
Barron's (www.barrons.com) is America's premier financial magazine, renowned
for its market-moving stories. Published by Dow Jones & Company since 1921, it
reaches an influential audience of senior corporate decision makers,
institutional investors, individual investors and financial professionals.
With new content available every week in print and every business day online,
Barron's provides readers with a comprehensive review of the market's recent
activity, coupled with in-depth, sophisticated reports on what's likely to
happen in the market in the days and weeks to come. As a result, Barron's is
the financial information source these powerful people rely on for market
information, ideas and insights they can use to increase their professional
success and enhance their personal, financial well-being.
©2009 Morningstar Inc. All rights reserved.
MORN-C
Media Contact:
Alexa Auerbach, 312-696-6481 or alexa.auerbach@morningstar.com
SOURCE Morningstar, Inc.
Alexa Auerbach of Morningstar, Inc., +1-312-696-6481,
alexa.auerbach@morningstar.com
