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CONTRIBUTORS

Tony Davidow, CIMA®

Senior Alternatives Investment Strategist
Franklin Templeton Institute

We recently hosted two groups of advisors for back-to-back due diligence meetings in Austin, Texas. Advisors had the opportunity to hear from several of our specialist investment managers as we delved into allocating to alternatives, product evolution and portfolio construction. It was great to see the level of advisor engagement throughout both programs. Dave Donahoo, Head of US Wealth Management Alternatives at Franklin Templeton, said: “The opportunity for us to spend quality time with our partners enables us to provide updates on our strategies, bring in our specialist investment managers to share market outlooks and insights, answer questions and foster discussion.”

Over the last several years, the industry has evolved a great deal, and discussions with advisors have moved from “why allocate to alternatives?” to “how to allocate to alternatives.” To help advisors with their portfolio construction process, I presented my research on “Building Better Portfolios with Alternative Investments: A Goals-Based Framework,” which utilizes case studies to illustrate the impact of alternatives to achieve client goals.

I began each session with a live poll asking the attendees about their current allocation to alternative investments. After presenting data on the historical risk-adjusted results, sharing information about how institutions and family offices have allocated to alternatives, and how the various strategies complement different market environments, I asked about their intentions for the year ahead. In both sessions, more than 95% of the advisors said they plan on increasing their allocations to alternatives.

We believe that the increasing advisor adoption is a byproduct of better education, greater familiarity with the asset classes, and product evolution that has dramatically expanded the access to alternatives. We have been pleased to partner with many of the wealth management firms as they expand their menus of options and have committed resources to educate their advisors about how to use these versatile tools.  

I always enjoy spending quality time with advisors. It helps inform our thought leadership and confirms that we are making a difference in their knowledge and acumen. Matt Brancato, Head of Broker Dealer Alternative Sales at Franklin Templeton, ended the meetings by saying: “We look forward to these meetings and continue to evolve our sessions to expand on our opportunity set, expertise, and resources. Being a part of the larger Franklin Templeton allows us to offer educational opportunities that are invaluable to our partners.”

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WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Investments in many alternative investment strategies are complex and speculative, entail significant risk and should not be considered a complete investment program. Depending on the product invested in, an investment in alternative strategies may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment. Diversification does not guarantee a profit or protect against a loss.

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The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

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