Advisers’ favourites fail to find gold: Morningstar

Not one of the 13 alternative investment strategies most actively sold by financial advisers is worthy of a gold rating, ratings house, Morningstar believes.

In its latest alternatives sector wrap, released yesterday, Morningstar revealed that just four of the 13, which account for 30 per cent of the ‘alternative universe ', had been awarded bronze medal status, while the remainder were classified as "neutral".

Morningstar senior analyst manager research, Julian Robertson, revealed that the ratings house had downgraded the Aspect Diversified Futures strategy from bronze to neutral, a move that was attributed to "turnover among key staff".

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However, Robertson said that "while we don't have as much confidence in Aspect Diversified Futures 17744 as we once did, we still think it can play a distinct, supporting role in investor portfolio".

He said the performance of managed futures strategies during the global financial crisis seemed to have persuaded many financial advisors and investors that these vehicles provide guaranteed portfolio insurance during market downturns.

"Their performance in subsequent market events shows that this is not necessarily the case," Robertson said.

"Correlations change over time, which means that there are periods when managed futures will be highly positively or negatively correlated to equities. Managed futures should not therefore constitute a portfolio's sole alternatives allocation."

Fund Manager/Strategy

Morningstar recommendation

Acadian Defensive Income

Neutral

AQR DELTA

Bronze

AQR Managed Futures

Bronze

Aspect Diversified Futures

Neutral

BlackRock Scientific Global Markets

Bronze

GaveKal Asian Opportunities

Neutral

Ironbark Global Diversified Alternatives

Neutral

K2 Asian Absolute Return

Neutral

K2 Australian Absolute Return

Neutral

K2 Select International Absolute Return

Neutral

Neuberger Berman Abs Return Multi Strategy

Neutral

Winton Global Alpha

Bronze

Zurich Investments Global Equity Income

Neutral

 




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