Allocation to gold drops to almost half, says Scorpio Partnership

During the first quarter of 2012, allocations to gold dropped by almost half to 10%, in favour of more risky assets, according to the semi-annual ‘Scorpio Partnership LPEQ High Net-Worth Asset Allocator’ survey, conducted on senior investment professionals from private banks, asset managers and family offices.

Allocations to alternatives holding were steady during the same period, at around 20%, while equities weighted for 43%, fixed income 31% and cash 6%.

The survey also assessed anticipated changes to allocations over the coming six months.

“Views are polarised with regards to real estate and commodities, with 38% and 39% respectively expecting to increase their allocations, while 8% and 15% anticipating a decrease in their allocations to those areas,” Scorpio said.

By contrast, only 4% of the 31 firms surveyed expected to decrease their private equity allocations, with 16% expecting to increase their exposure to private equity and 80% staying the same.

Respondents also expected private equity to deliver significantly higher returns than any other alternative asset class, even if they perceived a higher risk than six months ago.

In terms of making investments into private companies, 79% of respondents saw such commitments as too illiquid, with costs and corporate governance also cited as deterrents.

By contrast, respondents view listed private equity’s chief attribute as ‘liquidity: access and the ability to exit on demand’, followed by diversification benefits and the ability to buy at a discount.

The survey covered companies with assets under management of $6.3tr, representing 40% of the estimated $16.1tr global managed wealth market.

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