The diary of an alternative assets dealer – The Property Chronicle
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The diary of an alternative assets dealer

The Fund Manager

The looming crisis in list stocks and bonds is driving interest in alternatives – but their inherent illiquidity can defeat risk managers’ comprehension.

Alternatives is becoming a busy market. It would appear the global asset allocation committees are waking up to the madness of zero interest rates and the insanity of negative bond yields. They need to generate real alpha returns if the firm is going to post any kind of meaningful gains. I’ve stood in front of them many times and explained the attractions of investing in real assets producing dull, predictable, market-beating real returns, and the appeal of investing in private debt and equity deals that are de-correlated from the approaching crisis in financial assets – or listed stocks and bonds as everyone else calls them. As a result, the fund and our clients have been buying.

I remain highly sceptical of bond and stock levels – both are massively distorted by QE and central bank buying programmes, foolishly low rates and fund managers blindly following the stock and bond indices higher. It’s a recipe for disaster. And it would appear our risk managers are waking up to the looming risk crisis – well, kind of. They have been listening to our strategists and their mounting concern about just how liquid bond markets will be when the market turns. Some analysts from risk management have been asking fund managers how they are addressing liquidity risk. 

The Fund Manager

About Napoleon Bonnacord-Smith

Napoleon Bonnacord-Smith runs the alternative asset team within a well-known City firm. After too many years spent in M&A, capital markets and fund management, he now eyes every potential opportunity with a well-practised cynical eye.

Articles by Napoleon Bonnacord-Smith

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