Investors ready for alts

Sep 22, 2013 @ 12:01 am

By Liz Skinner

Advisers who may still fear a client's look of horror for recommending alternative investments should take note of these survey results — investors are ready to listen.

About 72% of investors would consider alternative investments if their adviser recommended them — up from 35% a year ago and a giant leap from 19% in 2011, a Natixis Global Asset Management SA survey found. About 43% said they already are willing to invest in alternatives.

EXPLANATIONS CRUCIAL

Education will be key, as 85% of investors said they would invest in alternatives if they understood them better, according to the survey, which sampled investors with at least $200,000 in assets. The survey, released last Tuesday, included 750 U.S. investors as part of a global survey of 5,650 investors from 14 countries.

“Advisers sometimes think they can't bring alternatives to the discussion,” said Matthew Coldren, executive vice president of Natixis. “But there's increasingly an openness from investors to learning more about alternative strategies.”

Most investors, about 61%, said they don't believe that traditional stock-and-bond portfolios are the best way to manage investments and go after returns, according to the survey.

In fact, about 28% of investors said they plan to increase their investments in real estate over the next 12 months, 28% in gold and other precious metals, 22% in alternative mutual funds and 20% in private equity, the survey found. About 25% plan to increase their U.S. stock allocation.

MANY INCREASING CASH

The largest planned shift in allocations, however, was by about 36% of the investors, who plan to increase the amount of their portfolios that are in cash over the next year.

Almost all investors, 86%, pay attention to the overall risk in their portfolios, and 82% try to measure it, the survey found.

“It's encouraging to see a strong focus on risk,” said John Hailer, chief executive of Natixis in the Americas and Asia. “We know from recent history that when investors are focused on growing assets without understanding the risks involved, it's a recipe for disaster.”

About half of the survey's investors don't have a financial plan, and about 45% don't have clear financial goals, Mr. Coldren said.

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