Abandoning Alts Is Shortsighted
The decision by some IBDs to move away from REITs amid the pandemic leaves their advisers with one less tool to use to help clients.
July 1, 2020 | Amanda Teeple | Investment News
In recent months, a spate of independent broker-dealers and registered investment advisers have suspended sales of retail alternative investments, including interval funds and NAV REITs. In the wake of a global health pandemic and economic crisis, this should hardly be a surprise, right?
On the record, firms say that with uncertainty hovering over the retail and office real estate sectors, it’s too difficult to value some of the underlying assets underpinning these investments. Therefore, no one should blame them for doing everything they can to protect advisers and their end clients until there is a bit more clarity.
Off the record, though, some would likely admit that this is also about regulatory and compliance anxieties. Still haunted by the memory of substantial fines and other stiff penalties associated with some of these products in the aftermath of the financial crisis, firms are loath to see the same thing happen to them this time around.
