INDIANAPOLIS-Locally based Real Estate Investment Securities Association, in partnership with New York city-based American Realty Capital, has produced a white paper that shows 91% of financial advisers surveyed are using alternative investments such as REITs instead of just direct investments, because of the struggling economic climate.
The report was derived from an online survey of 410 complete responses from financial advisers who provide financial planning to clients, use/recommend investments for at least some of their clients and are members of the Financial Planning Association.
The alternatives include pretty much every investment that isn’t a traditional stock or bond. Traded real estate investment trusts and funds are the top alternative selected by the surveyed advisers, followed by commodities, managed futures, oil/gas and hedge funds. The advisers said in their survey responses that they recommend investors keep 10% in alternatives.
Nicholas Schorsch, chairman and CEO of American Realty, tells GlobeSt.com that the paper is designed to get information out about all alternatives, not just REITs. “It’s a changing demographic for investors after 2008, people are so tired of the volatility and correlation of direct investments,” Schorsch says. “In 2008, bonds went down, interest rates went down as the same time stocks and yields went down, everything dropped at the same time. But if you owned real estate, you continued to get dividend.”
The negatives assigned to alternatives are that they are not as liquid as stocks, and take more time to research and understand than traditional investments. Even so, about 31% of financial planners intend to increase their use of alternatives in the next two years, according to the report.
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