The prospects for savers remain bleak, despite the first increase in US interest rates in nearly a decade. With the recent cut in UK rates and experiments in monetary policy easing, investors are being coerced into taking on more risk. Bond markets have also soared, pushing yields to record lows – the idea that bonds and stocks move in opposite directions is looking like a fallacy.
Apart from understandable concerns about valuations, the current investment environment is challenging for anyone looking to diversify their portfolio. Investors want new sources of return and many alternative assets have grown so much in popularity they are already heading towards the mainstream – real estate, hedge funds and private equity have all grown in popularity in recent years.