Janus Henderson's Watson: Approach 'fashionable' alternatives with caution

Tread carefully with risky assets, manager warns

Janus Henderson Investors' multi-asset team has warned investors to avoid indiscriminately flocking into "fashionable" alternative asset classes, suggesting a selective approach is preferable.

Nick Watson, a portfolio manager in the £4bn multi-asset team, said the diversification characteristics of particular assets cannot be read as constant. For instance, he said private equity cannot be described as uncorrelated consistently - as when markets turn the asset class can quickly convert into a high beta, small-cap equity play. "Investors really need to be aware of what they are buying," he warned. "Plenty of people are crowding into alternatives with a lot of assets, but they need to be very selective." Offering the example of peer-to-peer lending, he said while many trus...