In Condon’s view, the truly “different” aspect of the MLC LTAR is its method of portfolio construction, which is approached “on a scenarios basis rather than the typical mean variance analysis”, according to Condon. “We don’t have the skills to guarantee a successful TAA program over three years, we don’t think that’s possible. If you’d taken a negative view on equities in 1997, in three years you wouldn’t have had a business left but in a fund like ours you’re there. The LTAR is the dream portfolio of my team…we model 40 different scenarios for the future, select a cohort of the most likely scenarios and manage the portfolio around tolerances toward those.”

Jeff Rogers, the chief investment officer at ipac, agrees with Condon that “it doesn’t have to be illiquid to be an alternative”, but contends that the reality of packaging products, particularly in his milieu of the financial planner market, does make definitions helpful. “You’ve got to remember that in the US, any kind of property is considered an alternative asset, simply because there’s no tradition of investing in it as there is here,” he says.

Rogers has been thinking a lot about alternative assets lately, as his team overhaul the portfolios it offers to clients to include an “alternative markets” portfolio and an “alternative alpha” bucket. The “alternative markets” bucket will make up 3 per cent of ipac’s core diversified portfolio, and will include what might be termed the ‘alternatives usual suspects’ of private equity, infrastructure, distressed debt and commodities. Rogers says these exposures should be moderately correlated to equities, but less volatile, and have the propensity to deliver higher returns.

There are some other intended inclusions in the “alternative markets” bucket which further stretch the already loose definition of the a-word. For example, Rogers says the bucket will include “public market long-only mandates with no benchmark focus but a superior risk-return trade-off”.

He cites as an example of this the Morgan Stanley Global Franchise Fund, which selects stocks from a universe of approximately 150 listed ‘big brand’ names around the world, which in Rogers’ words have “built a moat around themselves” thanks to;

• Possession of dominant intangible assets

• Repeat business or recurring revenue

• Disciplined management

• Organic growth potential

• Sustainable high return on capital employed

Rogers says that long-only funds based around stocks with strong intellectual property and patent stories would also be classifiable as ‘alternative’. JANA’s Ian Patrick suggests another ‘alternative’ approach to long-only equity investment might be where a consortia of like-minded institutional investors, “who weren’t afraid to be business owners”, could take a majority position in a poorly managed, fundamentally sound listed company, and run it on a genuine 20-year vision.