Yield, income desire to drive alternatives
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Krystine Lumanta is a journalist with InvestorDaily, a Morningstar publication.
Opportunities in the alternative assets market would continue to emerge as Australian investors followed overseas trends and shifted towards investment strategies that provided consistent yield and income, an industry executive said yesterday.
The desire for the alternatives market would be driven primarily by the demographic change occurring in Australia and many parts of the world, Tyndall AM managing director Mike Davis said.
"The drive and the desire for more consistent risk-adjusted returns, that aren't necessarily driven by the vagaries of public liquid traded volatile markets, is actually going to drive more dollars towards what we all currently call alternative assets," Davis said.
"Consistent income provision is ultimately what the retirees are looking for - sure they'd like capital growth, but that comes with a trade-off, so this really circles back to where we as an organisation are placing our bets: our focus on income and yield is deliberate."
Tyndall AM was focused on its two principal strategies in water assets and secured loans, he said.
He said Tyndall AM was working with its parent company, Nikko AM, to make its alternative asset initiatives more globally available across both firms.
"From an alternatives assets perspective, they very much wind into the broader concept of yield and income," he said.
"We would like to think that over the coming months and quarters that there will be several initiatives for the secured loans space and the water space that we will developing in time to come."
He said there was growing institutional interest in water in the United States, thus from a firm perspective, Tyndall AM noted strong opportunities to participate in water and agriculture more broadly.
"The water theme can be played out through agriculture as a broader investment opportunity and clearly there's a lot of focus right now across many sovereign wealth funds about investing in Australian agriculture, such as Chinese buyers," he said.
"That's about [overseas buyers] placing long-term value on real assets."
In regards to pressure on superannuation funds to supply daily unit pricing, he said fund managers could not guarantee that products provided more liquidity than they actually held, although daily liquidity would not operate or be offered with these Tyndall AM alternative asset products.
"I recognise that it does restrict the market a little and I think [regarding] MySuper and the Stronger Super reforms, in an evolutionary sense, this will have to be factored in as part of the design that people ultimately look at," he said.
"But that will be a trade-off and it will come through with time and education."
On the contrary, there was an "education deficit" in Australia, compared to self-directed investors in the US, as they were much more educated on investment and engaged with their 401(k) retirement savings plan, he said.
"People have become frustrated due to the lack of appreciation of what taking a diversified investment approach really means," he said.