An Innovation in Implementing Alternatives
Almost given up for dead during the crisis, they have fully recovered and are set to outpace traditional assets over the next few years.
January 2010 | by John Olivier, Chief Investment Officer
The financial crisis seemed to mark a turning point in the spectacular growth of alternative investments, such as managed investments in hedge funds, private equity, real estate, commodities, and infrastructure. Poor performance and liquidity problems led to massive redemptions in several categories. By now, however, those problems have subsided, and alternatives are back on track. Globally, alternative assets under management more than doubled between year-end 2005 and year-end 2011, to seven-trillion.
To gain perspective on this rapidly changing business, we have for the past few years undertaken a research effort in partnership with Institutional Investor. Our most recent report, presents the highlights of the 2011 Global Survey on Institutional Investing. To get ready for this burst of growth, most traditional asset managers we surveyed agree that they need to ramp up their risk-management skills and product expertise and to make some changes in their sales processes and incentives. Managers specializing in alternatives say that they too must prepare—mainly by adding customer-centric capabilities to their strengths in generating market-beating results.
We believe our focus on recruiting and maintaining experts that can manage each local operation; allows us to create value across our investments. Regardless of the business segment in which we may be operating, we employ operational experts that know the business, know how to evaluate and manage our cost structure, make appropriate adjustments to structure and services, and expand into new markets in opportunistic ways. Our talented and industry-specific management teams, as well as a motivated, professional workforce with market-specific knowledge and expertise, create value for clients, customers, and shareholders by maintaining industry-leading margins. Our collaborative management process is aligned with market demands, ensuring our operations consider local market conditions when leveraging technology and work processes in order to improve efficiencies.
Our goal is to create shareholder value through a disciplined measurement approach. For more than thirty years, we have monitored local market conditions and operational performance by reporting on core metrics each week; these reports provide a real-time view of how each operation is impacted by actual, not forecasted, local trends. In addition, we strictly monitor metrics that ensure productivity is evenly matched with staffing levels and in line with proven best practices.