The Alternative Investment Summit

I enjoyed the Alternative Investment Summit last week. Justin Urquhart Stewart was as entertaining as ever, but he made some serious points along with the jokes: markets should be about the efficient allocation of capital and investing should be about building a diversified portfolio and then staying the course (underpinned by financial planning). Alternative investments have a role to play with both objectives.

Danby Bloch and the Tax Efficient Investment panel made some interesting observations about the planning process for (S)EIS and VCTs. When you’re investing in these products, it’s not necessarily about asset allocation (every client will have x% of Tax Efficient Investments) and much more about individual clients’ objectives and needs. Of course investment panels and the like save time, but be careful with centralised investment propositions in this area.

Crowdfunding got a mixed response – some venture capital managers revealed that they felt that crowdfunding investors were simply ignored as the investee company grew and found other sources of capital, but Goncalo de Vasconcelos of Syndicate Room did a good job of demonstrating that the right model (in his case an investor led model where they co invest alongside an experienced angel investor) can address this issue. Cormac Leech of Liberum and Louise Beaumont of GLI Finance also did a good job of making the case for peer to peer lending. The key point here was that while picking individual platforms and loans might be a good strategy for a consumer, advisers who are mindful of regulations and compliance (and quite simply the time they have available for research) would be better off investing in one of the retail funds investing in peer to peer lending that have emerged over the last two years.

Chatting to the audience, I think many of them were surprised at how far the Social Impact investment market has already come already. I do get a sense that there will be an appetite for SITR products among advisers, provided that enough providers engage and create a genuine market. The hard part will be building momentum – getting products to market and then, of course, getting investment in. In my view this is not something that we can just sit back and wait for market forces to achieve, which is why I think we are lucky to have Big Society Capital as a market champion. This is a great model and one that is leading the world in social investment as far as I can see.

Structured Products and Real Assets were also discussed, and some thoughtful investment cases were put forward for both of these asset classes. In the case of Structured Products, it’s clear that the industry has done a tremendous amount of work over recent years (much of it ignored by the trade press) and is now probably in a much better shape than many advisers realise.

We also had some great insights on regulation and compliance from Bovill, RPC and FOS. covering recent and ongoing thematic reviews, MIFID and PRIIPS. The point was also made that the FCA cannot be solely focused on consumer protection to the detriment of competition and that initiatives such as Project Innovate indicate that the pendulum may be swinging back in the other direction after a period of heavy handed intervention. However, the phrase “heads on spikes” was still used in reference to future enforcement and personal accountability though!

Overall, the day produced some great insights. Look out for the highlights video, interviews with the speakers and results from our interactive surveys of the audience – all coming up shortly.