Nearly 85% of senior international wealth managers expect to increase their allocation to the Asia Pacific markets in the next 12 months, with 33% looking to boost their allocations to both Latin America and the Middle East and North Africa.
Equity increase
Scorpio Partnership’s research also showed equity allocations are also set to increase further with 40% of those who responded expecting to increase their equity allocations even in their most conservative portfolios.
Alternative investment allocations are also on the rise with nearly one third (31%) of wealth managers likely to boost allocations in the coming months.
Fixed income and cash are likely to be sold down, “reflecting concerns about inflation and the impact of sovereign debt problems”.
Catherine Tillotson, managing partner of Scorpio Partnership, commented: “Many recognise that emerging markets and equity markets offer an attractive source of investment return, but with heightened volatility, persistent concerns about the robustness of the recovery and frontier market fears, managers need effective strategies to counterbalance the associated risks. It is therefore not surprising that we are seeing an increasing allocation to alternative investments – particularly hedge funds – as inflationary concerns hit the bond and cash markets.”
Hedge fund interest
Another interesting finding from the research is that wealth managers classify hedge funds at the low-risk, low-return end of the alternative investment spectrum, highlighting their growing importance of defensive hedge fund strategies in client portfolios.
Private equity, on the other hand, is still classified as high risk/high return although 50% of wealth managers expect to increase their allocation to private equity in the coming 12 months as a source of long-term returns.
Scorpio Partnership’s third bi-annual survey of asset allocation trends in the global wealth management market was carried out between April and June 2011. It polled senior investment professionals from 22 international wealth management managing a combined $5.7trn in individual client assets. The survey included universal banks, private banks, private client asset managers, multi-family offices and single family offices.
