Sunday, December 5

High endowments rise to alternative assets

Alternative investment assets, both in liquid and illiquid markets, are increasingly attracting the attention of investors in high net worth, what are making room for them in their wallets.

In the last three years, 61 percent of wealthiest investors chose to increase the allocation of private alternative assets, compared to a 5 percent that reduced it.

Likewise, more than half (52 percent) of the advisers of this type of clients anticipate that this type of illiquid assets will continue to gain weight in the next two years, according to Bfinance, which indicates that only 12 percent of investors will avoid this segment.

More interest in illiquids

Interest has also reached the alternatives liquids, although to a lesser extent. 39 percent of investors increased their exposure and 21 percent reduced it since 2018.

Looking ahead to the next two years, four out of ten respondents foresee a weight growth of liquid alternatives in portfolios, according to the ‘Wealth Manager Investment Survey’ by the consultancy Bfinance.

Among investors not yet investing in private equity markets, one in four plans to do so in the future. The 40 percent who rule it out cite regulatory requirements and insufficient data.

The survey has been answered by 120 wealth managers from 29 countries on five continents, with more than one 1 trillion dollars of assets in equity of its clients in total.

Less fixed income

On the other hand, the difficulties to obtain profitability in fixed income in a context of low interest rates it justifies the notable decrease in the proportion allocated in the portfolios of these investors.

In particular, 63 percent of advisers said they had reduced the weight of fixed income in the portfolios of high-net-worth clients and only 10 percent increased it.

Expectations also advance in the same direction. 35 percent expect the share of bonds, credit and debt to remain in their investment basket, compared with 42 percent that will reduce it.

The allocation on the stock market will increase

This reduction in fixed income will also be offset by the increased prominence of the Actions and the funds of variable income.

In these last three years, the survey reveals that un 66 percent of customers increased their inclination for such assets and only 6 percent chose to reduce it within their investor profile.

The forecasts of the patrimonial advisers is that the predilection for equities in the portfolios will continue. The survey indicates that 41 percent of investors will maintain the stock market share, 31 percent will increase it and only 16 will reduce it.

New assets

The rise of cryptocurrencies and digital assets has resulted in more than two-thirds of wealth managers adding new asset classes for their wealth clients in the past three years.

According to Bfinance, this trend is particularly prominent among wealth advisers from firms with the largest volume of equity, as 83 percent have added new investment strategies.

Looking ahead, 52 percent of respondents intend to add at least one new asset class or investment strategy in the next two years.

What are these products? It depends a lot on the region.

Less interest in passive products

In Europe, advisers are more likely to offer high-yield bonds and Japanese stocks than in Asia Pacific or North America.

However, the analysis determines that high European net worth invests below the average in ‘hedge funds’ and in real estate directly.

Regarding management funds passive, its penetration in the segment of high net worth investors will continue to grow in the next two years, although at a slower pace than up to now.

Thus, half of the advisers saw an increase in their commitment to this type of product since 2018, but only 21 percent trust that passive investments will continue to gain ground.