UK-based investment management firm BlackRock has launched a Fund of Alternatives pooled fund for pension schemes, charities and other institutional investors.
The firm said that the fund invests in a range of alternative investments, aiming to generate positive absolute returns with limited correlation to traditional equity and bond markets. The fund leverages BlackRock’s position in alternative investments and its expertise in asset allocation and managing the risks associated with investing in these instruments, added BlackRock.
The fund will invest across the full spectrum of alternatives, including hedge funds, funds of hedge funds, commodities, property and infrastructure and will have the flexibility to invest in funds run by external managers as well as directly into BlackRock’s own alternatives funds. Clients will also have the option of investing in a BlackRock-managed private equity fund within the portfolio.
The fund will be managed by BlackRock’s multi-asset portfolio strategies team and will be led by Ewen Watt, managing director of the multi-asset portfolio strategies group.
Mr. Watt said: Institutional investors should consider an alternatives component for their portfolio. Alternatives offer diversification and help to enhance long-term returns and to reduce volatility. Depending on the maturity of a pension scheme, we estimate that funds should allocate around 10-15% of total assets, or 25% of non-bond assets, to alternatives.
But managing an alternatives portfolio needs time and attention particularly in terms of monitoring risk and asset allocation. For investors without the necessary resources to do this, a pooled fund is ideal.
