Alternative investment has experienced significant growth over the last couple of decades and is gradually becoming a vital component of the mainstream financial industry. This emerging sector is garnering greater attention and acceptance from investors and regulators and has entered a growth stage where it is subject to the influence of several macroeconomic drivers and ecosystem changes.
The rise of emerging market economies is an important macro driver that is likely to impact the alternative investment sector in the most significant ways. These markets have become an important source of capital for the financial industry. Currently, a substantial amount of capital from emerging markets flows into the alternative investment sector via sovereign wealth funds. Also, an increasing number of high-net-worth individuals and their inclination towards alternative investment instruments holds great potential for the sector.
Likewise, the aging population of developed countries also constitute an opportunity for the alternative investments industry. The increase in number of pensioners is forecasted to lead to a funding gap in retirement systems. As a result, central banks are likely to keep interest rates near to zero to ensure low returns from fixed-income investments. Consequently, the alternative investment sector will benefit as pension funds will allocate larger proportions to unconventional investments to ensure a high return to their beneficiaries.
While the outlook remains positive for the alternative investments sector, there are a few challenges to overcome as well. In an attempt to enhance the stability of the global financial system, authorities have introduced liquidity, capital, and collateralization reforms that will discourage banks and other financial institutions from holding alternative assets on their books. These changes will directly impact the revenue of organizations operating in the alternative investment sector and cause them to look for new ways to maintain healthy profit margins.
In addition, there are some regulations aimed directly at the alternative investment sector. These new rules require firms to improve their infrastructure and reporting practices to ensure complete security and transparency. While these changes are likely to accelerate maturation of the industry, alternative investment firms will be required to invest a significant amount of capital and human resource in overhauling their existing infrastructure.
At Allen Austin, we help businesses operating in the alternative investment sector recruit leaders who are capable of driving their company’s success amid a new and diverse set of challenges. We combine our deep understanding of how alternative investment firms operate with our rigorous research in the areas of leadership development and organizational dynamics to craft comprehensive executive search strategies aimed at hiring the right talent for an enterprise. Our primary objective is to help our clients develop a team of forward-thinking executives who can tackle the challenges, as well as develop strategies to enter and establish reputation in new markets.
