Transcription of The Stock Network Interview with WAM Alternative Assets (ASX:WMA), Portfolio Manager, Nick Kelly
Lel Smits: WAM Alternative Assets is the only listed investment company on the ASX providing everyday investors access to a diversified portfolio of alternative assets typically reserved for institutions. Managed by Wilson Asset Management, WAM Alternative Assets focuses on delivering reliable income and capital growth with lower volatility than public markets. Ahead of Wholesale Investors Emergence 2026 conference in Sydney, I’m joined by Portfolio Manager Nick Kelly to discuss how alternative assets can play a powerful role in portfolios during periods of market uncertainty.
Nick, welcome to the Stock Network.
Nick Kelly: Thanks Lel, great to be here.
Lel Smits: Now, WAM Alternative Assets invests across private equity infrastructure, real assets, private debt and fixed income. Why are alternative assets increasingly important for investors that are really looking to reduce volatility and also diversify from really away from listed equities and bonds?
Nick Kelly: Yeah, so I think the key thing and you sort of pointed out there Lil is it’s all about diversification. It’s about creating a more resilient and robust investment portfolio. And we know that adding alternatives to an existing portfolio of equities and bonds results in a more resilient and robust portfolio.
Institutional investors have been investing this way for decades and decades. And I think a number of wholesale and retail investors are now understanding the role that alternatives can play in their investment portfolio. And really it’s about reducing that volatility and hopefully resulting in a more smooth return profile through various market cycles.
And it’s just creating a portfolio that’s more resilient. We don’t know what the future is going to hold and ensuring the portfolio can hold up to different forces in the economic cycle is really important.
Lel Smits: Absolutely and talking more about that resilience since Wilson Asset Management’s appointment. In October 2020, your own portfolio has delivered strong returns with significantly lower volatility than public markets. Can you give us an example of a successful alternative asset that you’ve invested in and also why it was so successful?
Nick Kelly: Yeah, sure. Happy to. So yeah, the portfolio has delivered really sound risk-adjusted returns since we took on the management of this portfolio over five years ago. So probably a couple of spring to mind.
The first one is our investment in the Palisade Renewable Energy Fund or PREF for short. So we invested in this fund approximately three years ago, about three and a half years ago. And over that time, it’s delivered in excess of 12% on an annualised basis net of fees.
And importantly, those returns have been generated half from capital appreciation, but also half from yield. And that’s been great given that we’re obviously a dividend income paying company. And so we’re able to use that income to obviously assist us in paying out our dividends to our investors.
But also we’re using income as a lever for risk management within our portfolio as well. And importantly, with that Renewable Energy Fund that we’re invested in, it’s got long contracted cash flows that are linked to inflation. So given the environment we’re facing and obviously the recent news about the CPI in Australia being pretty sticky and above forecast, obviously having inflation linked assets in the portfolio is a real benefit in this environment.
And probably the other one that springs to mind is one of our private equity portfolio companies, the Energy Network. Now we’ve owned that for a little over three years as well. They provide equipment and tools to grid operators and the like.
And that company has expanded its product offering and we’ve got that marked at over three times money multiple since we’ve invested. So that’s done exceptionally well and is outperforming its business case and hoping for an exit over the next couple of years. So look, some great examples of what this portfolio has to offer and importantly, you know, diversification benefits alongside equities and bonds for our investor base.
Lel Smits: Nick, thank you so much for the update from WAM Alternative Assets and I look forward to hearing more at Wholesale Investors Emergence 2026 conference.
Nick Kelly: Wonderful. Thanks, Lel.