Trends Watch: December 29, 2016

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies Snyderman.

This week, Elana talks to Justin Frankel, Co-Portfolio Manager, RiverPark Structural Alpha Fund.

What is your outlook for the alternative investment industry?

The past few years have been challenging for the alternative investment industry, in part because of the growing popularity of passive strategies and in part because many investors and advisors have been disappointed by the returns in their alternative allocations. While the industry will continue to struggle with these two issues, there is still a lot of opportunity for unconventional strategies to stand out from the pack. The trend toward higher interest rates and the likelihood for higher equity market volatility should create opportunities for managers and strategies that can capitalize on these two market forces.

What is your outlook for the economy?

We are not in the business of making predictions on the economy or markets, most of which is just noise anyway. That said, the mean reverting tendencies of equity market volatility would suggest that volatility is poised to go higher along with higher interest rates. These are the economic forces with which we are most interested.

What keeps you up at night?

I sleep pretty well at night, which is a direct benefit of managing what is essentially a systematic investment process. However, with a commander-in-chief who seems to demonstrate little emotional restraint when dealing with major policy decisions, there is a new level of uncertainty around the actions of the executive branch that we haven’t had to contend with for the last 8 years. It will be interesting to see how markets adapt to this new style of communication.