Investors are looking for new ways to get returns beyond equities and bonds, according to a survey by Natixis, a global asset management firm.
“Given their expectations and the current market environment, investors are looking for ways to increase returns [and] as a result are interested in alternative assets,” says Natixis.
A majority of investors (78 percent) are interested in innovative strategies that offer new sources of return, and 68 percent say a traditional approach to investing, consisting of stocks and bonds, isn’t sufficient to pursue those returns.
Currently, 55 percent of respondents invest in alternative strategies, such as hedge funds, private equity and long-short funds, says the survey of 750 adults with at least $200,000 in investable assets. Younger generations are more likely to use alternatives. Seventy-six percent of Gen Y and 62 percent of Gen X already invest in alternatives compared to 32 percent of baby boomers.
While investors may be looking for returns, they are “extraordinarily optimistic about their investment prospects in both the short and long term,” says Natixis. Respondents say they need 10.1 percent return on their investments, and 81 percent of them feel their expectations are realistic.
Fifty-four percent expect their returns this year to be better than 2014.
Stocks will be the best-performing asset class this year, according to 45 percent of the respondents, followed by 17 percent who say cash will be the top performer.
“American investors have gotten used to excellent stock market returns in the last few years, so their view of financial markets is notably positive,” says John Hailer, chief executive officer of Natixis Global Asset Management for the Americas and Asia. “At the same time, many investors remember seeing significant losses in their portfolios after the global financial crisis. The missing piece is that many haven’t really planned, or prepared themselves emotionally, for another market setback.”