In a research note Monday, Morgan Stanley said alternative asset managers, natural gas and MLP stocks currently offer the best risk-adjusted returns for yield-oriented investors, against the current backdrop of what appears to be a rising rate environment.
The firm noted that those three asset classes an alternative asset manager isn’t an asset class “have demonstrated little sensitivity – beyond their equity beta -- to changes in interest rates.”
Rising allocations to alternative investments and portfolio harvesting “in the middle innings of a multiyear super cycle” could produce strong tailwinds for the industry. The report’s authors said they see a 7.3% average dividend yield for alts managers in 2015 and 7.9% in 2016.
The firm’s highest-ranked securities in the sector include KKR, Oaktree Capital and Blackstone; while Apollo Global and Ares Management are its lowest-ranked alternatives managers.