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Alternative assets must have good track record to be appealing, say senior wealth managers

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Alternative investments need to have track records of several years before fund managers and other financial advisors will consider investing in them on behalf of clients, says a new poll. Past performance is seen as essential in the absence of regulation.



Amongst more than 40 senior figures from the wealth management industry including firms such as Merrill Lynch, Rothschild Private Management and Credit Suisse, nearly three quarters (73.3 per cent) believe that alternative investments such as wine, art, forestry and bloodstock need to have a track record stretching back several years before these advisors will consider recommending that clients invest in them.

The poll took place during an event hosted by Lawrence Graham LLP and promoted by Family Bhive, an exclusive member-based website comprising wealth owners and the private client industry which serves them.



“Almost all of those present reported that there is a major demand for alternative investments at the moment and great interest in investing in these assets which offer significant potential compared to traditional equities and bonds,” says Caroline Garnham, a partner at Lawrence Graham and the founder of Family Bhive. “But the lack of regulation around real assets (as distinct from financial assets) and concern about due diligence is obviously a key concern, our poll shows, hence, the interest in a track record as a way of instilling confidence."



Despite concerns about scaleability, the smaller size of funds was part of the appeal for 41.3 per cent of those present, with just 13 per cent saying that it was “off putting,” and 45.7 per cent describing size as “irrelevant.” 



Wine was considered to be the best performing class of asset funds. According to those present 40.9 backed this asset, compared to 29.6 per cent for small cap businesses and 11.4 per cent for art.

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