By continuing to browse our site, you are consenting to the use of cookies. Click here for more information on the cookies we use.

Hide
Hero banner image - ESG safety glass

Investor survey results: Alternative investments and asset allocation

16 August 2019

---PRESS RELEASE ---

High Net Worth private investors are increasing their exposure to alternative assets to achieve greater portfolio diversification in an uncertain economic climate, reveals research1 from Connection Capital, the specialist private client investment business.

More than a third (35%) of private investors are now allocating 20% or more of their investment portfolio to alternative assets – up from a quarter (26%) who said the same last year, according to a survey among 176 Connection Capital clients.

Over half (54%) of Connection Capital clients who responded to the survey have increased their portfolio weightings to alternatives in the last 12 months.

Connection Capital says the increase comes as some investors look to reduce their exposure to mainstream assets, like quoted equities and bonds, following recent public market volatility – and as they see opportunities increase to diversify within the ‘alternative’ asset space.

Allocation to alternatives 2019 v 2018

The ‘alternatives’ bracket covers a wide variety of asset types (and sub-sets), from private equity and commercial property to private debt and mezzanine finance and many more. Earlier this year, the Association of Investment Companies introduced a number of new sectors, including music royalties and direct lending, to its list of investment categories to reflect the growth and diversity of the alternative asset class .

Connection Capital says the increase comes as some investors look to reduce their exposure to mainstream assets, like quoted equities and bonds, following recent public market volatility – and as they see opportunities increase to diversify within the ‘alternative’ asset space.

The ‘alternatives’ bracket covers a wide variety of asset types (and sub-sets), from private equity and commercial property to private debt and mezzanine finance and many more. Earlier this year, the Association of Investment Companies introduced a number of new sectors, including music royalties and direct lending, to its list of investment categories to reflect the growth and diversity of the alternative asset class.

Connection Capital adds that investors are keen to incorporate assets that are ‘uncorrelated’ to mainstream market movements into their portfolio mix, to target investment returns in turbulent times.

Recent ‘uncorrelated’ investment opportunities that Connection Capital clients have participated in include: investing in a portfolio of shared student houses (where market dynamics differ from the residential property market overall), commitment to a leading third party litigation funder (since cases decided by the courts are not related to the economy) and an investment in a life sciences fund advised by a market leading fund manager with a 30 year track record in the industry.

Asset basket recalibration in the year ahead

57% of respondents have less than half of their portfolio allocated to listed equities. Looking ahead, only 11% plan to increase their exposure to listed equities in the coming year, while 35% say they plan to increase their exposure to alternatives.

Within the alternative asset class, private equity remains a popular option, with 41% of investors surveyed saying they expect to increase their private equity allocations over the next 12 months.

Listed equities vs alternatives over next 12 months 

Claire Madden, Managing Partner at Connection Capital says, “The traditional portfolio mix is being shaken up. More and more experienced private investors are seeing the merits of diversifying across alternatives to boost returns and resilience.”

“To an extent this trend is being driven by economic uncertainty, with Brexit and other geo-political tensions still buffeting stock markets, prompting investors to rethink what they are investing in and how much. But it’s also due to a growing awareness of – and access to – the range of different opportunities that exist within alternatives.”

“Sophisticated investors are not putting 20% or more of their eggs in the same ‘alternative’ basket – they are spreading that 20% across a number of disparate alternative investments to reduce concentration of risk and smooth out returns.”

Connection Capital’s model enables experienced private investors to spread capital across multiple different alternative asset opportunities spanning private equity, private debt, commercial property and specialist funds, by enabling clients to invest collectively, participating in multiples of £25,000.

1 Connection Capital's 'Alternative investments survey' was conducted in August 2019 and collected responses from 176 high net worth private client investors.

Download the full research presentation

About Connection Capital

Connection Capital LLP is a Financial Conduct Authority authorised and regulated, specialist syndicator of investment funds from private professional investors into direct private equity, private debt and commercial property deals, as well as alternative asset funds. It currently has some £250 million of funds under management (as at 31 March 2019) across a diverse portfolio, including investments in Virgin Wines and property tenanted by Travis Perkins and Premier Inn.

Connection Capital provides a specialist managed service to help professional clients build up their own alternative asset portfolios. Private investors self-select which opportunities they want to take a stake in, investing in £25,000 tranches. Opportunities are identified and negotiated by Connection Capital, which also carries out all due diligence and manages the investment from completion through to exit, on its clients’ behalf.

ENDS

Press enquiries:

Claire Madden
Partner
Connection Capital
020 3696 4010 or 07764 241476

Russell O’Connor
Headlines for Business
07760 282586

 

 

 

 Russell O'Connor
07760 282 586 or Email

Woolverstone House,
61-62 Berners Street,
London, W1T 3NJ, United Kingdom
020 3696 4010