Investors Prefer Private Equity To Hedge Funds, Survey Suggests

by Phillip Morton, investors Offshore.com

17 May 2007

The results of a new UK investor survey have suggested, somewhat surprisingly, that private equity is the most popular alternative asset class among private investors.

Of those who responded to the poll by Trustnet, 39% revealed a preference for private equity, whereas only 19% of the respondents said that they mostly used hedge funds or other investments based mainly on derivatives and futures.

Commenting on the results, Paul Wynne, Trustnet's head of marketing and communication, noted: "Private equity products clearly have a place in modern portfolios as an asset class and it is also interesting to note that hedge funds and other options derivatives are more suited to the more experienced."

The survey also suggested that private equity was much more popular than other alternative asset classes such as fine art, wine, classic cars and race horses.

The survey also revealed something of a divergence in preferences between investors with advisors and those without. Private investors with an advisor were more likely to invest in hedge funds (19%) compared with those making decisions without an advisor (11%). However, almost one in three advisors preferred to invest their clients' money in hedge funds, making these funds almost as popular with intermediaries as private equity (33%).

Fine art and wine were more popular than hedge funds, with 20% of those with an advisor and 24% of those without preferring these investments.

Trustnet's survey follows a Financial Services Authority (FSA) consultation paper into alternative investment funds.

Wynne added: "One shouldn't ignore the possibilities for classic cars, fine art and wine should the FSA determine that alternative funds of investment funds may be possible."

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