Ninety-two percent of advisors say in a new survey that a high level of integrity and transparency were the most important considerations when selecting an alternative investment provider.
Strong, consistent investment performance followed with 91 percent of those surveyed citing it among their top three criteria, according to the survey by Franklin Square Capital Partners.
A low degree of correlation to other asset classes was the third-highest priority for advisors, with 82 percent of respondents ranking it in their top three considerations.
Other important criteria included competitive pricing (74 percent) and the length of a provider’s track record (72 percent).
Liquidity came in at the bottom of the list of factors, with 38 percent of respondents saying they would choose a provider based on whether its products are fully liquid.
Nearly eight in 10 advisors agreed that alternative investments’ low degree of correlation to other markets makes them more suitable than other asset classes for portfolio diversification.
Eighty-nine percent of respondents indicated that they invest in mutual funds as an alternative investment vehicle. REITs and ETFs that invest in alternatives followed as a strategy employed by advisors.
Advisors prefer to learn about new alternative products and managers from wholesalers, according to Franklin Square. Of those polled, the majority say wholesalers are best at educating advisors about new alternative investment managers and products and keeping them up to date on changes to existing alternative solutions.
Conducted by Cogent Research, the survey polled 268 independent brokers and registered investment advisors with assets under management of at least $10 million and annual revenues of at least $75,000.