In pursuit of more stable returns, wealthy investors are increasingly embracing less-traditional asset classes, such as derivatives, private equity and hedge funds, and moving away from equities, index funds, bonds, annuities and real estate, according to a Barclays Wealth survey of 790 high-net-worth individuals around the world.
Forty-eight percent intend to invest in equities, down from an average of 64% in the previous three years, and 20% said they plan to put money into debt instruments, down from 26%.
“Intuitively, absolute returns make a lot of sense, and we see that more wealthy individuals are thinking in those terms,” said Kevin Lecocq, chief investment officer at Barclays Wealth. “Assets like hedge funds, which are an early example of an absolute-return investment, derivatives and structured financial products, can all be used to manage risk, reduce volatility and stabilize results.”
Fewer than half of respondents are confident in their financial knowledge, revealing a need for financial education and advice from planners and private bankers.