High net worth investors on the hunt for diversification and better investment returns are increasing their exposure to alternative investments and pulling cash off the sidelines to do it. However, a large percentage of investors still require more education and guidance to capitalize on the opportunity.
These findings are revealed in “Investing Outside the Box,” a new study on trends in nontraditional investing from MainStay Investments, a New York Life company and Barron’s Top Fund Family. The study was conducted by Harris Interactive among a nationally representative sample of more than 800 HNW investors ages 40-65.
“Allocations into alternatives are growing as HNW investors are taking a closer look at their investment returns and diversification goals, and learning how alternatives can fit into a smart asset allocation strategy,” says Stephen Fisher, president of MainStay Investments. “However, with 39 percent of respondents reportedly lacking confidence in their knowledge of alternatives, there’s a real opportunity to bridge the information gap.”
Among the key findings, HNW investors using alternatives, on average, have 22 percent of their portfolios invested in alternatives. One quarter of these investors (26 percent) see their exposure to alternatives increasing over the next five years by an average of 2.9 percentage points. Another 66 percent believe their level of exposure will remain the same.