As part of a series of interviews with alternatives experts at Asian wealth managers and private banks, FSA speaks with Cora Chiu, managing director, head of investment management North Asia, Deutsche Bank – Private Bank.

What key trends do you see in alternatives?

CIO view: Among private markets/real assets, we currently prefer private infrastructure. The asset class sits at the heart of global, structural themes (from energy transition to AI-enabled infrastructure and defence infrastructure).

We see three key trends shaping alternatives today. First, investors are increasingly seeking exposure to long-term structural themes that are less dependent on short-term economic cycles. Infrastructure is a prime example, benefiting from powerful drivers such as energy transition, digitalisation, AI-related investment, and enhanced national resilience spending. Second, private equity secondaries continue to attract interest as investors look for solutions to private equity returns with potentially lower execution and vintage risks than primary commitments. Third, investors are becoming more selective, favouring managers with scale, sourcing advantages and demonstrated execution capabilities.

From an asset allocation perspective, these trends reinforce the role of alternatives as strategic portfolio building blocks rather than tactical allocations. We continue to view alternatives as an important source of diversification and a way to access parts of the investment universe that are not available through public markets. Within the space, we currently prefer private infrastructure given its exposure to long-term structural growth trends, its potential for resilient cash flows and its ability to complement traditional equity and fixed income allocations through market cycles.

What specific objectives would you hope to achieve with an alternative allocation and how would you measure success?

CIO view: Our Chief Investment Office has included Alternative Investments in its Strategic Asset Allocation, as Alternatives play a key role in creating a more diversified, robust portfolio which also captures the part of the investment universe which is not publicly listed.

Alternative investments play an important role within our strategic asset allocation framework. Their primary objective is to enhance portfolio diversification by providing exposure to return drivers that differ from those of traditional public equities and bonds. Alternatives can also broaden investment opportunities by giving investors access to private markets and specialised strategies that are not readily available through listed securities.

Success should be measured over an appropriate investment horizon and against the objectives for which the allocation was made. Beyond returns, we look at how effectively alternative investments improve portfolio resilience, reduce concentration risk and contribute to achieving long-term financial goals. For income-oriented strategies, stability and consistency of cash generation are important considerations. For growth-oriented allocations, the focus is on long-term value creation and participation in structural trends. Ultimately, a successful alternatives allocation is one that improves the overall risk-return profile of a portfolio while helping investors remain well positioned across different market environments.

Where are you most likely to allocate more to within the alternatives space in the next twelve months?

CIO View: We currently prefer private infrastructure. The asset class sits at the heart of global, structural themes (from energy transition to AI-enabled infrastructure and defence infrastructure).

Our current preference within alternatives remains private infrastructure. The asset class sits at the intersection of several powerful long-term investment themes, including energy transition, digitalization and the growing infrastructure requirements associated with artificial intelligence and data-driven economies. We also see increasing strategic importance being placed on areas such as energy security, transportation networks and critical infrastructure that are critical to support the economy, which can create attractive investment opportunities over time.

What makes infrastructure particularly compelling is its combination of growth potential and resilience. Many infrastructure assets provide essential services with long-term contractual revenues, helping to support more predictable cash flows across market cycles. In addition, ongoing investment needs in both developed and emerging economies create a substantial opportunity set for experienced managers with strong sourcing and operational capabilities.

While we continue to monitor developments across private equity, private credit and hedge funds, infrastructure currently offers one of the most attractive combinations of structural growth, diversification benefits and long-term investment visibility within the alternatives universe.

What is the most common challenge or issue you’ve encountered when doing due diligence or assessing existing alternatives allocations? (eg: liquidity issues, fees, valuation transparency, performance disappointments)

One of the most common challenges in alternative investments is balancing the appeal of long-term return potential with the need for transparency and discipline in manager selection. Alternative strategies often involve less frequent valuation reporting, longer investment horizons and varying degrees of liquidity, which means investors must have a clear understanding of the underlying assets, investment process and risk management approach.

As the market has expanded and evolved over time, manager dispersion has also increased. This makes due-diligence particularly important, as outcomes can vary significantly depending on a manager’s sourcing capabilities, portfolio construction discipline, operational expertise and exit management. We therefore place significant emphasis on evaluating the quality of the investment team, alignment of interests, governance framework and track record across multiple market cycles.

Another important consideration is ensuring that the investment is appropriate for a client’s objectives, liquidity requirements and overall portfolio construction. In our view, successful alternative investing is not only about identifying attractive opportunities, but also about ensuring that the strategy fits within a well-diversified, long-term investment plan.