UK-based Rensburg Sheppards Investment Management,  says its new alternative assets portfolio has left conventional portfolios trailing behind, a performance track record that helps explain why such assets continue to attract strong client interest.

Over the initial six month period since launch, the portfolio grew by 3.6 per cent to outperform the FTSE 100 total return of 1.6 per cent.

“The portfolio’s performance already illustrates the consistent low volatility returns which will complement the traditional assets classes. Over the first six months firm commodity and energy prices, including gold bullion, where the portfolio has a good exposure have been a key driver in the performance; infrastructure funds have also made an important contribution,” James Bedingfield, senior investment director at Rensburg Sheppards said.

Their advocates say that alternative assets such as structured products, hedge funds, infrastructure vehicles, commodity funds, private equity and commercial property offer the potential for higher returns than cash or fixed interest with lower volatility than equities. 

Mr Bedingfield is still confident that such assets will continue to perform ahead of cash over the next two to three years, regardless of whether equities rise or fall.

Some analysts have warned that alternative assets such as commodities, currently rising fast due to demand from nations such as

China, could eventually turn sour if there is a significant shift in the balance of supply and demand. There is also debate about whether hedge funds, which have become a familiar part of the investment landscape, can be thought of as asset classes in their own right instead of means of investing in types of asset.