Growth in appetite for alternative assets

Nov 27, 2018 Blog  Alternative assets , high net worth investors



In an article recently published in Peer2Peer Finance News, it was stated that “a quarter of high net worth (HNW) investors are now allocating at least one-fifth of their wealth into alternative assets such as peer-to-peer lending (marketplace lending)”, according to new research.

Specialist investment firm Connection Capital commissioned a survey to 120 of their private investor clients and, according to their managing partner Claire Madden, they found that “alternative assets are no longer a sideshow”.

“Given the current challenging investment environment for traditional asset classes, a move towards higher allocations to alternatives is understandable for sophisticated private investors with the right risk profile.”

“20 per cent in alternatives might sound like quite a chunk, but there is the possibility for tremendous diversification within the spectrum of alternatives.

“Alternatives is a broad category containing many different sub-sets of assets and investment strategies”.

“Investors will therefore want to branch out into several types of alternatives where possible, so they can create a variety of returns streams while avoiding excessive concentrations of risk building up in any one area.”

The survey found that investors are seeking access to a range of sophisticated alternative strategies in order to improve their overall risk-adjusted returns.  25% or the survey respondents have a fifth or more of their portfolio allocated to alternative assets, including private equity, commercial property and hedge funds.  Even though these strategies are often less liquid, a long-term approach can enable investors to hedge against more volatile shorter-term investments.

Madden said: “Incorporating assets with different time frames is one way to achieve greater diversification, such as including private equity or property which tend to have a longer-term investment horizon alongside more liquid, but also more volatile, quoted equities.”

For the full article, click here.

Image: Smile Precision via Flickr (CC 2.0resized)

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