Zenith CEO David Wright

Financial advisers have lost faith in alternative investments after a concerted period of poor returns according to Zenith Investment Partners chief executive David Wright, with more education needed on the asset class’s purpose required.

Speaking at a media event in Sydney on Thursday, the research and investing firm’s CEO said advisers have been shy on alternatives since the pandemic-induced volatility of early 2020, despite the market bounce-back.

“One of the things we’ve noticed to dealing with mainstream advisers [is they] have essentially kind of given up on alternative investments,” Wright said. “There does seem to be a fair bit of both adviser and investor apathy…”

Wright believes part of the issue is that the outperformance of equities has made alternative investments, which have produced “pretty muted or pedestrian type returns”, look poor by comparison.

“We’re big advocates of alternatives,” he said. “They’ve never been designed to keep pace with, you know, raging bull equities markets, so I think there needs to continue to be education around that.”

Their value, he explained, should be examined in the context of non-correlated diversification and as a way to protecting portfolios.

“The use of alternative is going to be very, very important… not just as a way of protecting invested capital but also as a way of actually generating returns in downward or sideways moving markets.” he said.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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