Changing demographics look to alternative market

Date: Thursday, September 24, 2009
Author: Joy Dunbar,

An increasingly ageing population will mean that alternative investments will be a more significant asset class for retail investors, according to the Alternative Investment Management Association.

Responding to a question at the FSA's Asset Manangement Sector conference about hedge funds for the retail investor, Todd Groome, non-executive chairman of Aima, said that changing demographics mean in the future people will have to fund their own retirement.

Mr Groome, a former adviser for the International Monetary Fund, said: "With the demographic changes that come with an ageing population, there will be a growing trend for individuals to look after themselves in retirement. A large bank-oriented fund manager said to me he would like to find a way of getting more risk into clients portfolios to increase returns.

"He was not just talking about hedge funds but simpler alternative investments. The banker said that once fees, tax and other charges have been paid there is not much left, so more risk is needed in the fund. The fund of funds industry could see general retail investors actively manage their funds not just high net-worth one."

Thomas Deinet, executive director of the Hedge Funds Standards Board, said hedge funds were not an homogeneous area but an innovate sector and its activities are complex.

He said: "We want to retain the competitiveness of European markets including standards principles and rules. We have to work with industry to deliver a consistent set of global standards."