In this video, Newton head of mixed assets investment Paul Flood outlines where he sees opportunities in alternatives after a tricky couple of years for the sector.
Key points:
- The alternatives market has had a tough couple of years due to higher interest rates, leading to weaker performance and reallocation of capital to the bond market.
- However, recent M&A activity suggests opportunities are emerging, and the sector may be due for a rebound.
- Another tailwind could come if interest rates stabilise or decline, and cost disclosure issues come to an end.
- Discounts to net asset value present an opportunity, particularly in areas like renewable infrastructure.
- From a portfolio construction perspective, alternatives can provide resilience with regulated revenues, stable inflation-linked cash flows, and attractive yields.
