Jefferson National, seller of the popular Monument Advisor family of variable annuities, has announced it is offering three new liquid alternative investment choices for financial advisors to add to their clients’ portfolios.
The new investments were launched in response to advisor demand, Jefferson National also said.
Laurence Greenberg, president of Jefferson National, said in a news release that the new alternative investment choices will help meet the needs of registered investment and fee-based advisors, and help investors build more “resilient” portfolios.
In recent years, advisors have been drawn to alternative investments because the asset class boosts the yield on fixed-income portfolios, which are struggling because interest rates have remained low for so long.
Jefferson National said one of the alternatives from ALPS Funds would provide exposure to private equity. A second option, from Neuberger Berman, allocates investments to multiple subadvisors. The third choice, from Black Rock, is a fund that invests in other exchange traded funds.
Advisors have shown a propensity for alternative investments. An October 2013 survey by Jefferson National found that 64 percent of RIAs and fee-based advisors had increased their use of alternative investments in the past five years.
The survey also found that 55 percent of RIAs and fee-based advisors see their allocation to alternatives continuing to increase over the next five years. In addition, 76 percent said they would consider increasing their use of alternative investments if they could have access to them through low-cost, tax-deferred vehicles.
Advisors with clients in the Monument Advisor family of variable annuities already have access to more than 350 investment options, including 69 alternative investments, the company said.
Alternative investments are called “alternative” because they invest in areas beyond stocks, bonds and cash. Some alternatives are very volatile, others less so. Real estate, precious metals, commodities and futures typically are considered alternative investments.
Once the province of institutional investors and hedge funds, alternative investment strategies have percolated into the retail arena in the past several years. They are known as liquid because they are bought and sold through stock exchanges every day.
While the pace of launches of alternative funds has tripled since 2009, allocations to alternatives within retail portfolios remained less than 5 percent, according to a December 2013 report issued by Goldman Sachs.
Howard Schneider, a consultant to the financial advisory industry, estimates in a report published earlier this year that nine out of 10 financial advisors are using liquid alternatives compared with an estimated eight out of 10 last year.
In his report titled “Financial Advisors and Liquid Alternatives 2015 — Insights and Opportunities,” Schneider finds that many advisors still want more accurate information about how alternative investments perform during different market cycles.
Many liquid alternative investments have been launched since the financial collapse, but with markets generally on an upswing since 2008, advisors don’t know how one product or strategy will fare under a prolonged bear market.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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