Asset Management
Deutsche Lauds Alternatives As Market Headwinds Strengthen

The bank's wealth management arm points to hedge fund strategies it thinks can give portfolios impetus in a more difficult market environment.
The wealth management arm of Deutsche Bank is
trumpeting the charms of alternative investment areas such as
hedge funds which it said can deliver returns as storm clouds
darken over equity markets.
Against a backdrop of concerns about protectionism, rising
interest rates and an expectation that high returns from listed
equities are unlikely to continue indefinitely, Deutsche Bank
Wealth Management says alternative investments deserve more space
in portfolios.
“While we believe that investors should stay invested in the
market – albeit hedged – the portfolio diversification potential
of alternatives in general could prove crucial, particularly if
they can help stabilize a portfolio when the normal historical
relationships between traditional asset classes do not hold, at
times of market disruption, Christian Nolting, global chief
investment officer at CIO at Deutsche Bank Wealth Management
said.
“We believe investors are seeing the benefits of additional
returns, the diversification away from traditional asset classes,
and less volatile returns. Hedge funds for example could be seen
as a partial substitute for bond allocations, while illiquid
investments could potentially offer the so-called illiquid
premium,” Nolting continued.
The firm favours discretionary macro hedge fund strategies, which
attempt to gain from macroeconomic, policy or political changes.
Deutsche said these strategies’ can capitalise on differences
between the economic policies of major economies.
Equity market neutral strategies should benefit from an increased
dispersion of performance across sectors and stocks. Deutsche
said.
The bank added that event-driven strategies, which typically try
to exploit price movements in and around events such as mergers,
will do well increased corporate deal activity.