The appetite to allocate capital to alternative funds has appeared to continue to increase, with investors looking to balance their appetites for risk and return while at the same time achieving diversification in their portfolios.
This trend has accelerated in the wake of the pandemic too, as nations look to ‘build back better’, with private equity, real estate and infrastructure investment all having the potential to make a significant difference to communities around the world. Alternatives are now mainstream.
At the same time, though, the landscape is becoming increasingly complex.
We’re seeing more and more private capital pouring into the sector, with family offices sitting on vast amounts of dry powder, looking for the right opportunity to put their capital to work, with the potential to disrupt an area previously reserved for institutional investors.
Covid-19 has also driven real change in the ESG agenda, with investors increasingly aware of greenwashing and now looking for sophisticated evidence of impact and change.
The regulatory landscape is shifting too – substance rules, disclosure obligations, reporting requirements and distribution mechanisms are all making the landscape more complex, while digital adoption continues to shape the alternatives space in ways that just a couple of years ago we might not have predicted.
It’s a landscape that offers both opportunities and challenges for the alternatives industry, and for the domiciles that support it.
Understanding what is going on ‘underneath the bonnet’ and shaping the alternatives space, not just in the coming months but in the long-term too, is absolutely vital for specialist fund hubs.
As a forward-thinking centre specialising in alternative funds, Jersey keeps a close eye on these trends to ensure it continues to offer a stable, reliable and straightforward platform for managers and investors.
To do that, looking carefully at what makes the alternatives sector tick is vital – and this survey with Funds Europe provides a useful benchmark. Building on the findings of last year’s survey, this year’s report provides further insights into an industry that offers huge potential in meeting the aspirations of global communities, whilst also pointing to some key issues for the coming years – sustainability, transparency, cost, and governance.
Elliot Refson, head of funds, Jersey Finance
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