Alternative assets are still popular among high-net-worth investors as a vital way of diversifying their portfolios, new research has found.
A survey from specialist private client investment business Connection Capital surveyed 233 of its clients with a total estimated net worth of £2.2bn.
It found that 87 per cent of investors are planning to maintain or increase their allocations to alternative assets over the next 12 months.
And 80 per cent of respondents said they will consider new alternative asset investments this year. 40 per cent are ready to invest immediately.
Just over half (53 per cent) said they have increased their cash reserves since the start of the coronavirus crisis and the most common reason given is to ensure they have liquidity when attractive investment opportunities arise.
“We are seeing clear buy signals from private capital for alternative assets and relevant strategies despite – or because of – the wider market turmoil,” said Claire Madden, managing partner at Connection Capital.
“High-net-worth investors are being pragmatic. They have lived through economic crises before and seen first-hand that some excellent investment opportunities can emerge in the aftermath and that some investment strategies become more attractive. They don’t want to miss out.
“These private investors are thinking with a trader mentality. They want to be liquid so they can act when they a see good deal or fund strategy, with a view to maximising returns when the market recovers.”
The survey also found that investors are more optimistic about the outlook for private equity, private debt and alternative asset fund opportunities than for mainstream quoted equities.
87 per cent of respondents said they were planning to invest in alternative asset funds, 79 per cent in private equity and 67 per cent in private debt, compared to 64 per cent who say the same for the stock market.
However, investors were more wary of commercial property, as social distancing rules prompt many businesses to move away from office space to remote working.
“This healthy private investor appetite is good news for businesses,” added Madden. “Government support won’t last forever, and private capital, which can offer a huge amount of flexibility in the way it is structured, will be essential for restoring companies to strength in a post-Covid world.”