Private Banks Turn to Alternatives to Spread Risk - AAA

Online, July 8, 2011 (Newswire.com) - Private banks are once again happy to put their money into private equity and hedge funds as they turn to alternative assets to spread risk, claims Alternative Asset Analysis (AAA).

The analysis from an advocacy organization, which focuses on alternative and ethical investment markets, said this is one of the biggest indicators that alternatives now offer a valid option for institutional investors.
According to figures from Scorpio Partnership, the UK's largest wealth management firms now have 17 per cent of their investments in alternatives, up from just seven per cent two years ago.

"We welcome the news that private banks in the UK are joining pension funds in deciding to expose a greater percentage of their portfolios to the alternatives market. Their confidence in the market will add further validity to alternative assets as a truly profitable option, which carry far less risk in terms of their relationship with the general performance of the wider economy," explained AAA's analysis partner, Anthony Johnson.

Rob Burgeman, the director of wealth management firm Brewin Dolphin echoed these remarks in a statement to the Financial Times. He said that managers were now preoccupied with, "the endless quest for something that is not correlated with traditional equity markets".

One of the major reasons for reassessing risk is simply the increased pressure from clients, who are keen to ensure their money won't disappear overnight if another economic slump should raise its head, according to analysts. Scorpio's managing partner, Catherine Tillotson, said that the combination of a risk averse client base and a more attractive alternative investment market has resulted in the popularity: "Private banks are by nature cautious with their clients' money [and] on the whole alternative industry has looked to get its house in order and private banks are trying to learn from the mistakes that happened in the past."

AAA advocates investment in alternative and ethical assets, such as real estate, impact investing, sustainable forestry investment through firms like Greenwood Management and Fresh Invest, and even in precious metals and art.

"As major institutional investors will now attest, there is real money to be made in alternatives and they do not follow the economy as closely as equities, so are a solid option for an unstable climate, such as the one we are all currently experiencing," added Mr Johnson.