13-04-2011, 08:04 AM
Business Times - 13 Apr 2011
More investors turn to equities as inflation hedge
Yet another trend is a shift toward more complex investments, reports GENEVIEVE CUA
EQUITIES are private investors' most sought-after inflation hedge, followed by gold, Barclays Capital's latest survey of wealth managers has found.
The survey also found that allocation to US equities has grown considerably: In a balanced portfolio US equities had the second- largest weighting, compared to seventh-largest last year. Sixty- five per cent of respondents said that they were likely to raise this allocation over the next six months.
The survey this year attracted a broad base of respondents - 129 participants from 104 wealth firms across nine Asian countries. The wealth management firms had assets under management (AUM) of a total of US$5 trillion.
Yet another trend is a shift toward more complex investments. In 2010, 82 per cent of respondents said clients were searching for vanilla products.
This year, there appears to be an increased emphasis on alternative, quantitative or market return-based strategies.
Peter Hu, Barclays Capital head of investor solutions (Asia ex-Japan), says: 'In this environment where there is a lot of conversation about inflation risk and how to hedge it, our survey has seen an overwhelming majority using equity or thinking of it as the best way to hedge . . .
'The emerging markets don't have an (inflation protected securities) market, but equities are a good proxy.'
Investors may also find the gold price daunting. Gold has risen nearly 30 per cent over 12 months. This year, it has risen 11 per cent from a low of US$1,314 at end-January to US$1,467.
Equities continued to be the asset most recommended by wealth managers for the next six months, even though the weighting has been reduced somewhat. Investors are advised to hold a 37 per cent allocation in equities, compared to 42 per cent last year.
In terms of product features, 68 per cent picked liquidity as a very important or essential feature. Last year, the top feature was growth.
Wealth managers continued to forecast strong growth in AUM for the emerging Asian wealth markets. Almost 60 per cent of respondents expect revenues to grow by more than 5 per cent in Asia (ex-Japan) over the next two years.
China and India are expected to post the strongest AUM growth. The outlook for Asia's developed economies isn't as bright, however.
Three-quarters of those polled expect Australia's revenue growth to be negative or less than 5 per cent over the next two years. Ten per cent of respondents also expect South Korea to post negative growth in AUM.
More investors turn to equities as inflation hedge
Yet another trend is a shift toward more complex investments, reports GENEVIEVE CUA
EQUITIES are private investors' most sought-after inflation hedge, followed by gold, Barclays Capital's latest survey of wealth managers has found.
The survey also found that allocation to US equities has grown considerably: In a balanced portfolio US equities had the second- largest weighting, compared to seventh-largest last year. Sixty- five per cent of respondents said that they were likely to raise this allocation over the next six months.
The survey this year attracted a broad base of respondents - 129 participants from 104 wealth firms across nine Asian countries. The wealth management firms had assets under management (AUM) of a total of US$5 trillion.
Yet another trend is a shift toward more complex investments. In 2010, 82 per cent of respondents said clients were searching for vanilla products.
This year, there appears to be an increased emphasis on alternative, quantitative or market return-based strategies.
Peter Hu, Barclays Capital head of investor solutions (Asia ex-Japan), says: 'In this environment where there is a lot of conversation about inflation risk and how to hedge it, our survey has seen an overwhelming majority using equity or thinking of it as the best way to hedge . . .
'The emerging markets don't have an (inflation protected securities) market, but equities are a good proxy.'
Investors may also find the gold price daunting. Gold has risen nearly 30 per cent over 12 months. This year, it has risen 11 per cent from a low of US$1,314 at end-January to US$1,467.
Equities continued to be the asset most recommended by wealth managers for the next six months, even though the weighting has been reduced somewhat. Investors are advised to hold a 37 per cent allocation in equities, compared to 42 per cent last year.
In terms of product features, 68 per cent picked liquidity as a very important or essential feature. Last year, the top feature was growth.
Wealth managers continued to forecast strong growth in AUM for the emerging Asian wealth markets. Almost 60 per cent of respondents expect revenues to grow by more than 5 per cent in Asia (ex-Japan) over the next two years.
China and India are expected to post the strongest AUM growth. The outlook for Asia's developed economies isn't as bright, however.
Three-quarters of those polled expect Australia's revenue growth to be negative or less than 5 per cent over the next two years. Ten per cent of respondents also expect South Korea to post negative growth in AUM.