Wealth managers and financial advisers boost alternatives allocations

81% of wealth managers and financial advisors have said that clients have been investing in a wider range of asset classes than normal over the past 12 months, according to a survey.
According to the study by Ortec Finance, a provider of risk and return management solutions, this diversification trend reflects a strategic move by investors to mitigate risks and enhance returns in a volatile market environment.

97% of advisors indicated that clients are increasingly building international and diversified portfolios, with 87% expecting this trend to persist over the next three years.
Alternative assets have been a standout area in this diversification drive. 91% of advisors said they have increased client allocations to alternative assets, driven by strong performance and the availability of more funds. Additionally, 50% of advisors pointed to the attractive returns and low correlation to equities as key motivating factors for this shift.

Private market funds raised $295bn in first quarter

The study highlighted that private equity and private debt have seen the largest increases in allocations over the past year. These asset classes are expected to continue growing, with 83% of advisors planning to increase allocations to private equity and 85% to private debt over the next two years. Conversely, real estate allocations are expected to remain stable or decrease, as only 34% of advisors foresee increased allocations in this sector.

Tessa Kuijl, MD, Ortec Finance, commented: “Wealth managers and financial advisors are adapting to a much wider range of investments as clients’ opportunities broaden. The shift to more diversified portfolios, including more alternatives and international portfolios, demands expanded expertise from wealth managers and advisors. We deem this a positive trend because it enables clients to benefit from a better risk-return equation to increase the probability of reaching their goals.”

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