Taking an allocation to private equity to replace some fixed income exposure is also on option for Weijand, at least “for those who can afford a little bit more risk”. “We have one guy on our team who is specialised in private equity, though we would not invest in companies directly, but through a fund. Diversification is key,” he says.
Optimix, another wealth manager, is also venturing into the illiquid space. It’s planning to make illiquid assets such as private equity an integral part of the portfolios of its clients in the +€5m segment. “We just hired a new colleague who will be solely responsible for illiquid assets,” he says.
“Crowdfunding is a hobby, it’s not investing”
Crowdfunding is another trend that has gained prominence with retail investors in recent years, as an alternative to bonds and savings accounts that yield next to nothing. But Dutch wealth managers are sceptical.
“Crowdfunding is not about investing, it’s a hobby,” says Bouma. Weijand agrees: “How would one classify all these individual companies? It’s just a big guessing game. The amounts of money involved are too small to warrant a proper credit analysis, so basically what you hope for is that the number of different companies you invest in shields you enough from default risk, but you’re still blind. So we haven’t been involved in crowdfunding yet.”
Vetter agrees, though he notes investing through crowdfunding platforms is not a complete leap in the dark. “You get one hint: these companies all have in common that they didn’t get a loan from the bank.” The reason for this, however, need not be that their creditworthiness is doubtful. They could simply go for crowdfunding because they get a better deal there, and the fact that the UK crowdfunding industry, a frontrunner in Europe, tripled in size from 2014 to 2015 suggests it’s not all that dodgy.
Click here to read part one of this series about strategic fixed income allocation, which focusses on the need to accept more volatility in your bond portfolios.
Click here to read part two, where we look at the pros and cons of absolute return funds as a fixed income alternative.
