Although Towry Law is optimistic on stocks, it rules out a stratospheric climb
Investment advisory firm Towry Law maintains that alternative investments are appropriate vehicles for many investors in the current market climate.
David Chapman, senior portfolio manager in Towry Law's asset management division, says alternative investments have proved to be low-risk vehicles and are well suited to the volatile equity market.
'Of course, it depends on what the client is trying to do, but they deliver better returns than bank deposits, at little more risk. They become less attractive in a raging bull market, which we don't think is going to happen for some time. Although we are more comfortable and optimistic about markets, we don't think they are going to be soaring into the stratosphere. But there will be more attractive returns from equities.'
Towry Law uses multiple strategy alternative investment funds aimed mainly at capital preservation, Mr Chapman says.
'If [you] are preserving capital and eking out monthly returns steadily, then over 12 months you have growth significantly better than bank deposits, without much volatility. Over the past 12 months you are looking at 7 per cent to 8 per cent, which we think is very attractive compared with cash deposits paying less than 1 per cent in US dollars. And alternative investments deliver their return with very little volatility, so investors are able to sleep at night.'
However, Mr Chapman says alternative investments will lose some of their allure in a strong bull market because their returns will not match those available from direct equity positions.