For the second consecutive year, advisors cited managed futures as the asset to which they were most likely to increase their exposure. Currency funds, on the other hand, failed to feature in the top five.
Managed futures and currency mutual funds logged inflows of $3.6 billion and $3.4 billion respectively in 2011, even though managed futures actually lost 6.9 per cent during the same period, and while currency funds have depreciated every year since 2008.
Although advisors and institutions agreed that diversification was driving alternative investments, they cited high fees and lack of liquidity as barriers.
In recent years the proportion of advisors concerned about lack of liquidity has fallen sharply, from 60 per cent in 2009 to 40 per cent in the recent survey. This coincides with the launch of many new liquid alternative products, the survey report said.
The survey was conducted in January and involved responses from 365 financial advisors and 264 institutions.