Wealth managers in the UK and Switzerland are increasingly viewing alternatives as a core portfolio allocation, with more than half suggesting an optimal allocation of up to 25 per cent.
A study by Brookfield Asset Management’s Alts Institute, which provides financial advice and resources, found growing adoption of alternative investments among wealth managers. Respondents identified private equity, infrastructure, private credit and real estate as the asset classes most likely to see increased allocations over the next one to two years.
More than half of respondents said they believe an optimal alternatives allocation is between 16 per cent and 25 per cent, while 83 per cent said alternatives are now used as much for risk management as for return generation.
Looking ahead, 64 per cent of wealth managers said they plan to increase their use of evergreen funds over the next two years when allocating towards alternatives.
The study surveyed more than 600 wealth managers overseeing $657m (£497.2m) of assets under management, as well as 60 fund selectors across the US, Canada, the UK and Switzerland.
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“Our Alts Institute survey research reinforces that alternatives have become an increasingly important part of the wealth management toolkit,” said John Sweeney, chief executive of Brookfield’s private wealth business. Brookfield Asset Management is a global alternative asset manager with more than $1tn of assets under management.
The survey also highlighted a shift in sentiment towards alternatives among wealth managers. Three-quarters said their conversations with clients have moved beyond basic education and are now focused on portfolio goals and investment outcomes.
Alongside this, 75 per cent of respondents said wealth managers without strong alternatives offerings may be at a competitive disadvantage.
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“As wealth managers gain experience with the asset class, conversations are shifting from understanding alternatives to determining how they can be used within a portfolio to help clients achieve specific investment objectives,” Sweeney added.
The research comes as a separate study by GlobalData found that private markets are reshaping global wealth management. According to the report, rising allocations are being driven by a changing market environment, with investors increasingly seeking diversification, resilience and long-term returns.
