UK private banks double clients’ allocation to alternative investments in three years


UK private banks have doubled the proportion of their clients' portfolios that is allocated to alternative investments over the last three years, according to research undertaken by Hotbed, a specialist supplier of private equity.

A large number of the surveyed private banks said that alternative investments frequently account for up to 20 per cent of a client’s investment portfolio, compared with a maximum of ten per cent three years ago. A few banks had a proportion of up to 25 and 30 per cent.

Alternative investments consisted mainly of private equity, hedge funds and commercial property.

‘Private banks provide a bespoke service to their clients, so the proportion varies according to individual circumstances and preferences,’ said Gary Robins, chief executive of Hotbed. ‘But there is no doubt that alternative investments now play a much larger role than three years ago. As little as five years ago they were not considered an asset class capable of recommendation.’

The main reasons behind the increased client interest in the alternative asset class are the disappointment with the performance of more ‘mainstream’ investments, a greater understanding and appreciation of risk/reward ratios and the benefits of diversification, and the publicity that alternative investments have generated plus the greater ease with which they can be accessed.

Hotbed provides funding to companies looking to raise up to £5m of equity.

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