Three years ago most private banks were suggesting to their clients to allocate no more than 5% to private equity, with just a third recommending a higher commitment. According to a report by Hotbed, a London-based small cap investor, this figure has doubled, with the average allocation to private equity in client portfolios increasing up to 10%.
Gary Robins, chief executive of Hotbed, said: “Private equity is playing a far greater role in the investment portfolios of private banking clients than it was just a few years ago. There is now a better understanding of the risks and rewards, investor appetite has grown sharply, and more private banks are geared up to meet demand.”
Two-thirds of those banks surveyed said a typical allocation for a client in private equity would now be between 5-10%. Some said that the proportion could be even higher if clients have the appetite, sufficient liquid wealth and the required understanding of the asset class to make this appropriate.