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Channel Islands Can Tap Alternative Investment Growth

by Jason Gorringe, Lowtax.net, London
20 July, 2015

A predicted global rise of investment in alternative assets is expected to offer significant opportunities for Guernsey in coming years, according to a new report.

The predicted rise featured in the "Alternative Asset Management in 2020: Fast Forward to Centre Stage" report recently published by PwC. The report says that investments in alternatives could double from their current level to reach USD15.3 trillion by 2020 if the high performance of capital markets continues to be driven by favorable monetary policy and stable GDP growth.

By 2020, PwC predicts there will have been a fundamental shift towards alternative investments by many sovereign and public pension funds. By 2020 it is expected that global pension fund assets will have reached USD56.6 trillion, with alternative assets expected to play a considerably larger role in their asset allocation mix. PwC expects alternative asset managers to continue to move into areas traditionally dominated by banks, such as lending, securitization and financing as the funding gap in the world's economies continue to present considerable new opportunities. Others will create partnerships with banks and the largest institutional investors, providing integrated expertise in managing new asset classes and building customized products.

Roland Mills, director of PwC in Guernsey, said:

"The shift in global economic power from developed to developing regions will drive continued focus on sovereign investors, fast-growing institutions and the emerging middle classes in new markets. New markets and untapped investor types will open up if alternative managers can develop the products and access the distribution channels to tap them."

"Most firms will recognize that success in generating alpha - measuring performance on a risk-adjusted basis - does not on its own guarantee success as an organization. Those managers who are looking not just for growth but for sustainable growth, will develop their infrastructure, have a clear strategy and create robust organizational structures to exploit the opportunities that will emerge in the coming years."

"Whilst the mega-managers may focus on a multi manager strategy and building a global distribution platform, for many managers the focus will need to be on driving alpha, sticking to their core strategy and being able to clearly explain that strategy to the investors they are targeting. If they do this there is a bright future for the independent boutique alternatives' manager."

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