When Barclays Wealth recently released its survey of high-net-worth investors, one message came out loud and clear: Fund managers have work cut out for them.
Nearly 50 percent of those surveyed revealed they would spend more time selecting investments before deciding where to park their money. "Due diligence of providers is main priority."
And, hedge fund managers in particular may have an even harder nut to crack: investors are retreating to "familiar and and simple asset classes favoring real estate, government bonds" and cash.
Conducted for Barclays Wealth by the Economist Intelligence Unit, the study polled 2,100 high net-worth individuals globally in April and May. Forty percent of respondents had between $750,000 and $1.5 million in investable assets; 40 percent between $1.5 million and $15 million; 10 percent between $15 million and $45 million; and 10 percent in excess of $45 million.
The investors showed little appetite for "added risk, even when they recognize that significant investment opportunities may exist in the current environment."
“The widespread sense of caution and risk aversion highlights the extent to which wealthy investors have been restrained by the events of recent months,” said Aaron Gurwitz, Head of Global Investment Strategy for Barclays Wealth. “It may be quite some time before we see both confidence and a heightened appetite for risk return to the market.”
Key elements of the due diligence process appear to be assuming more importance to wealthy investors, with results pointing to almost half of all respondents planning to spend increased time selecting specific investments. The survey showed that priorities for selecting an investment provider will also undergo changes in the year ahead, with quality, transparency and financial stability of the investment provider being crucial factors in the decision.
“The financial and economic crisis has had a considerable effect on the framework within which high net-worth investors view their investments,” said Gurwitz. “The time horizon for assessing performance has been dramatically shortened, and concerns about liquidity, transparency and what they’re actually investing in have become much more important.”
Contrasting the survey findings, the head of a single family office in New York City, told The Capital Express: "I do not find very many family offices going completely to cash."It depends on the specific fund. But what I generally find is that not many of them are running away from Hedge Funds."
The family office chief executive, who declined to be identified, said family offices may have made only "slight modifications" to their investment strategies before the recession struck. Family offices invest for the long run and take into consideration possible market fluctuations in their investment strategies, she concluded.
Source: The Capital Express (www.TheCapitalExpress.com)