A predicted rise of investment in alternative assets is expected
to offer significant opportunities for Guernsey as a premier
location for alternative asset funds and fund managers, in the
According to 'Alternative Asset Management in 2020: Fast Forward
to Centre Stage', a report recently published by PwC, investments
in alternatives could double from their current level to reach
US$15.3 trillion by 2020 if the high performance of capital markets
continues to be driven by accommodative monetary policy and stable
GDP growth, or reach US$13.6 trillion if interest rates in Europe
and the US rise and capital markets undergo correction.
Roland Mills, Director at PwC in Guernsey, said: "Given the bulk of
their funds business is in alternatives, for the Channel Islands,
these trends represent real opportunity."
PwC said growth in alternative assets will principally be driven
by three key trends: a government-incentivised shift to individual
retirement plans; an increase in the number of
high-net-worth-individuals from emerging populations; and growth in
sovereign investors, expected to come from the SAAAME region (South
America, Asia, Africa and the Middle East).
"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," said Mr
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 US$56.6 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.
Mr Mills added: "Most firms will recognise that success in
generating alpha - measuring performance on a risk-adjusted basis -
does not on its own guarantee success as an organisation. Those
managers who are looking not just for growth but for sustainable
growth, will develop their infrastructure, have a clear strategy
and create robust organisational 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'
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