High networth investors shun traditional strategy

Dubai: High networth investors in the UAE who are active in property investments and individual stocks and shares intend to move towards less traditional asset classes such as private equity, hedge funds, commodities and, to some extent, alternative assets in the next three years, according to a global report published yesterday by Barclays Wealth.

Investors in the UAE are planning to cut equity investments significantly (15 per cent) in the next three years.

Also, they intend to cut investments in property by 18 per cent. However, hedge fund and private equity investments will go up by nine and six per cent respectively.

"That suggests a trend among the investors of an increasing appetite for products that have the ability to generate stable returns rather than volatile or market-linked returns," said Zaid Al Rawi, sales director for Barclays Wealth in Dubai.

But the report titled Barclays Wealth Insight: Risk, Return and Reward points out that only five per cent of those who responded said they were "very confident" in their knowledge of stocks, alternative funds and capability of private wealth providers.

Fewer than half of those surveyed were confident in their knowledge and understanding of key aspects of personal finance. With regard to knowledge of estate planning, 21 per cent stated that they were "very confident."

"And this suggests that wealth managers of the region have an opportunity to provide specialist advice to the investors requiring specialist knowledge," Al Rawi added.

Globally, with regard to appetite for risk, the UAE demonstrated a greater willingness to adopt high-risk strategy to achieve high returns (35 per cent) when compared to most European countries such as France (24 per cent), Italy (24 per cent), Spain (21 per cent).

"Investors in the UAE are having a higher risk strategy because they probably live with risks on a day to day basis," Al Rawi said.

And finally, on the issue of leaving wealth to dependents, while 46 per cent of the respondents felt that "it is not a good idea" to leave large sums of money to children, however, 62 per cent do want to make sure they have money to pass on to the next generation of their family.