Why are people putting some or all of their pensions into Alternative Investments?
Oct - 10 | 
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Property Investment Guide
With the global financial shocks of the last few years investors have looked for alternatives to the mainstream savings, investments and pension products that have, broadly, performed so badly. The ‘holy grail’ has been investments that will not only hold their value with greater certainty but also increase above the rate of inflation – requiring growth of 7.63% a year for higher rate tax payers at the moment.
Alistair Burns of TM Alternative has this to say; ‘Many of the alternative investments offer investors an attractive package of low market volatility, fixed annual income, have an underlying value that cannot easily be eroded, are tangible with a defined exit, accessible, inflation-beating and easy to understand. We find our clients love the feeling of empowerment and security this brings them’.
John Redwood, long-standing and respected Conservative MP and Chairman of Evercore Pan Asset investment advisors, had this to say in his magazine column in the pension trade jounal Investment Week 12th September; “There are generations of investors who have been brought up to believe Western equity investment is the right answer for pensions and charitable funds, and for rich individuals. Buy shares more or less any time, and hold them for long enough, and you will make money.’
He goes on to cite that the economic recovery model now being followed in Europe has not worked in Japan (facing similar problems since 1990) and its economy continues to languish 20 years later – a country once poised to overtake the American economy with its growth projections. He continues; ‘Investing in advanced economies with banking weakness and demographic problems may tip the balance too much against the pension or endowment investor…the conclusion I draw is you cannot always rely on equities to earn you the returns you need’
What we draw from this is that investors making pension provision should not totally rely on equities and those based in the (erroneous) comfort zone of geographic areas close to home. Investors should look to diversify their portfolio by asset type and region (outside the UK and Eurozone), looking at emerging markets and perhaps the more tangible asset types they can deliver – so called ‘alternative investments’.
The SIPP Zone brings together a unique gathering of pension ‘whistleblowers’ with free seminars and 1-2-1 advice at Excel London 13th- 15th October.
For those that can’t make it to the event there is a handy free guide to download from www.sippzone.info.