The financial crisis taught institutional investors many
tough lessons including the importance of non-correlated assets in periods of
New research from Cerulli Associates, the financial
analytics firm, suggests that capturing low-correlated and non-correlated asset
classes is one of the primary tools large institutional investors are seeking
to achieve volatility mitigation. Diversifying sources of income is equally of
interest, if not more critical. The upshot for financial services and insurance
providers is that insurance asset managers are gaining market traction in the
asset management industry by meeting these demands through the creation of
customized investment strategies.
Further, product development among leading investment
managers appears to be heavily concentrated in the areas of alternative
investments and multi-asset class funds. Researchers found more than half (53%)
of fund shops surveyed are actively developing new alternative and
low-correlation investment products, with an additional 38% considering
development. New multi-asset class products are in development at 41% of
investment shops, and an additional 24% are considering the development of new
offerings in the space.
The third quarter 2014 issue of “The Cerulli Edge -
Institutional Edition” examines the unique challenges of achieving
low-correlation portfolios in the modern era of global market connectivity. One
of the upshots of the research is that Cerulli believes it is in asset
managers' best interest to work closely with insurance providers on
asset-allocation strategy development.
In addition, several institutional asset managers told
Cerulli they are working to have more in-depth conversations with clients on
the broad topic of asset allocation, and more specific talks on managing
risk-factor exposures. The firm believes
these talks can be a big value-add for institutional asset managers and
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