Alternative investments are providing both business opportunities and challenges to custodians, whose response will determine their profile in an increasingly competitive arena, Silvia Pavoni reports. The growth of alternative asset classes seems to be here to stay. According to a survey by consultancy PricewaterhouseCoopers (PwC), investors will increase their portfolio allocations to commodities, real estate, infrastructure, private equity and hedge funds. All of these areas have palatable attributes because they have higher returns, create portfolio diversification or offer a long-term, reliable income. But they do not come without complications. Beside talks of inflated prices -as with commodities - or significant hits by the credit crunch, especially in the case of real estate, alternative investments often cause headaches to investors and their service providers when it comes to transparency, valuation and accounting.
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