Wealth Managers are expanding the range of investment strategies available to clients, particularly within alternative asset classes including hedge funds, adding to a new survey from bfinance.
Firms are innovating too as they fight to maintain market share and profitability in an era of fee compression and new tech-based competition.
The Wealth Manager Investment Survey gathered data from 120 wealth managers in 29 countries across five continents. Major developments are divided into three key areas: expanding investment capabilities, the rise of ESG and impact investing, and—finally—evolution in structures, systems and service providers.
More than two thirds (69 per cent) have added new asset classes for wealth clients within the last three years, with 52 per cent stating they will do in the next two years. Fully 60 per cent now provide exposure to private equity, 52 per cent use emerging market debt, 52 per cent use private credit, 48 per cent use infrastructure and a further 42 per cent provide access to hedge funds.
When looking at allocations, the majority of wealth managers have reduced the proportion of wealth client assets invested in fixed income (63 per cent) while 66 per cent have increased allocations to equities and 61 per cent have increased allocations to private markets strategies. The shift towards alternatives is set to continue strongly in the next two years, with improving sentiment towards liquid alternatives such as hedge funds, but only a minority plan to increase equity exposure. The surge of passive investment is also slowing. Just 21 per cent of wealth managers expect to increase their use of passive strategies in the next two years, compared to 50 per cent in the last three years.
Kathryn Saklatvala, Senior Director and Head of Investment Content at bfinance, says: “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.”
