|High net worth clients are more interested in alternative investments than they were in 2017, a new Millennium Trust survey reveals. Nine out of 10 HNW investors are willing to invest in alternative assets, according to a press release about the survey.
Interest has specifically increased in private equity, real estate, and hedge fund asset classes, the release notes. And advisors need to talk with clients more about alternative investments to match their demand, the authors of the report suggest.
“If advisors don’t talk to clients about alternative investments, clients will bring the investments up in meetings,” Gary Anetsberger, CEO of Millennium Trust, says.
HNW investors “slightly” or “somewhat interested” in hedge funds increased by almost 20% in 2018, study data from 500 HNW respondents shows. Interest in private equity and real estate also increased by 33% and 19% respectively. And the increased interest in alternative investments has a couple of main drivers, Anetsberger says.
“People want diversification and different ways to generate greater yields. Access to alternative investments is also increasing because of new technology platforms,” he says.
But in distinct contrast to client needs, advisors apparently spoke less with clients about private equity, real estate, and hedge funds in 2018 than in 2017, survey data shows.
Conversations about alternative investments are particularly important because they can make up a quarter of a HNW clients’ healthy asset allocation, Anetsberger says.
“Depending on the individual’s risk appetite and time horizon, alternative investments can be between 15% and 25% of an HNW client’s portfolio. They could even go up to 40% if the investor is comfortable with that,” he claims.
HNW investors need alternatives in their portfolios, Anetsberger suggests. They offer attractive “risk return profiles and don’t correlate with public markets,” he says.
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