Real Return Users Group is the name a small group of financial planners and funds managers have used for a national association to promote the benefits of alternative investments and target return strategies to the government and other regulators.
Philip Reid the Principal at financial planning practice and director of consultancy firm Target Risk Funds, is heading the group, which currently has six Australian Financial Services licensees and a handful of funds managers expressing an interest in being involved in the group.
Reid has made comment that “the traditional approach to portfolio construction, known as strategic asset allocation, had failed to deliver optimal client outcomes while investment strategies which focused on return objectives and level of risk were more beneficial and appropriate for clients and also created a competitive advantage for advisers.”
Reid conceded that the real return movement faced serious opposition from the government, ASIC and the Financial Ombudsman Service, as well as Professional Indemnity insurers who considered these strategies to be high risk and commented that, “five years ago when I used to talk about alternative strategies, managed discretionary accounts and outsourcing investment management, I used to get run out of boardrooms but now we’re seeing more interest, particularly from the independently-owned part of the market.”
He also added that as every funds manager had an absolute return or real return strategy there was still a lot of issues involving how best to access and implement them in portfolios and via platforms and the need to resolve these issues by engaging with the regulators, research houses and product manufacturers.
Details of the Real Return Users Group are still being finalised, but advisers will likely pay a membership fee of around $1,000 and Reid, said the group would look to form a board made up of advisers, with the “group being run for advisers and by advisers”.