Alternative Investments: Wealth Managers Add Alternatives Because Bonds Pay Next To Nothing (Report)

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A Wealth Management Investment Survey by bfinance found “significant changes” in wealth managers’ strategies.

The recent Wealth Manager Investment Survey by bfinance covered 120 wealth managers handling over $1trn (£720bn) in assets. The survey noted that wealth managers were expanding their investment capabilities, with growing allocations to alternative investments and coverage of an increasingly diverse range of asset classes. (INVESTMENT WEEK)

“In an era of low yields and weak growth forecasts, wealth managers are adding new asset classes and channelling a greater proportion of wealth client assets towards alternative investment strategies in private and liquid markets,” the report observed.

Key insights from the survey on wealth managers’ positioning

  • 80% of wealth managers now integrate ESG considerations as part of their offering, up from 37% three years ago (a 116% increase)
  • 55% plan integration of ESG across all wealth client strategies
  • 35% seek to create specific ESG offerings for those clients that seek this dimension
  • 10% have no intentions in the ESG space
  • 69% said they have added new asset classes for wealth clients within the last three years
  • 52% state they will do so in the next two years
  • 21% of wealth managers expect to increase their use of passive strategies in the next two years, versu 50% in the last three years
  • On alternatives – 60% now provide exposure to private equity, 52% to emerging market debt, 52% private credit, 48% use infrastructure and 42% provide access to hedge funds
  • 63% of wealth managers have reduced the proportion of wealth client assets invested in fixed income
  • 66% have increased allocations to equities
  • 61% have increased allocations to private markets strategies
  • 87% of wealth managers have added new technologies for clients to use within the last three years
  • 90% intend to do so in the next two years

Wealth managers leaning towards alternatives and ESG

Kathryn Saklatvala, senior director and head of investment content at bfinance, said: “It’s fantastic to see the breadth of investment capability that many wealth managers are now able to offer to clients – the results of this survey show a significantly higher usage of strategies such as private equity, infrastructure, private credit and hedge funds than we’ve seen in other studies, and far more widespread integration of ESG factors into investment.”

Related Story: “Replace The Flawed 60/40 Approach With A Multi-Asset Portfolio” – 7IM

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