Private wealth activity | With Intelligence

Private wealth activity.

In September, we surveyed 54 private wealth investors about their hedge fund investment intentions. The results of that survey and additional With data – trend analysis of our private wealth intel articles and investor profiles – provide an overview of the opportunities in the private wealth market for hedge funds and insight into the context and criteria around them.

Allocation intentions.

Around 40% of private wealth investors are likely to allocate to hedge fund strategies over the next 12 months, according to a With Intelligence survey from September. The finding – derived from the intentions of 54 private wealth allocators – suggests a decreased appetite for hedge funds among the allocator subgroup in the past six months, after a With survey from Q2 had the proportion of private wealth investors likely to allocate closer to 50%.

However, while there has been a drop in hedge fund interest generally, some specific strategies are set for an uptick in demand. Analysis of 55 hedge fund-related private wealth intel articles over that same six-month period (comparing intel in the first three months with intel in the second three months) reveals more references to interest in long/short equity: 55% between August and October compared to 23% between May and July.

Unsurprisingly, given the pandemic turbulence and enormous price dislocations, macro and distressed strategies also saw an uptick in the latter three-month period. Conversely, multi-strategy has experienced a downturn in private wealth investor enthusiasm (a finding that is backed up by recent flows data, showing a $4bn+ net outflow across September and October).

Proportion of hedge fund PW intel to reference increased interest to hedge funds, by strategy.

Topics of discussion.

What is the context in which this interest is developing?

Given the wider focus on high inflation and increased infrastructure spending, it is perhaps unsurprising that macroeconomic topics were those most frequently cited in With’s private wealth intel in the past six months, and that there was an uptick in such citations in the latter three.

This focus has no doubt influenced other topics. The interaction of macroeconomics, private equity and geopolitics with the ongoing pandemic has made private investors reassess not only how their portfolios are constructed, but also how fickle equity valuations can be.

This is also reflected in references to ‘investment topics’, where With intel emphasizes the interest in private equity (the only investment topic tracked with increased citations over the past three months).

At the other end of the spectrum, there were few references to crypto and ESG, perhaps demonstrating that, for private wealth at least, these trends have some way to go before they entwine with hedge fund investing.

Top four intel topics,
Aug-Oct 21.

45%

Macroeconomics

38%

Private equity

28%

Pandemic

21%

Geopolitics

Investment topics.
Economic topics.

There are currently 2,381 private wealth investor profiles on the With Intelligence hedge fund platform.

Investment criteria.

Further analysis of With’s investor profiles (those for investors featured in With’s private wealth intel from the past six months) reveals the variations in approach and attitude between smaller investors from North America and Europe.

North American private wealth investors expect their managers to have a longer mean track record and greater AuM than European private wealth investors.

While the track record requirement is comparable, the expectations on AuM are starkly at odds. North Americans clearly favour established managers with the scale to execute their strategies and, similarly, are three times as likely to make ESG a consideration in their investment decisions.

Only in the gritty negotiation of manager fees is there substantial overlap on North American and European attitudes.

Typical PW investment criteria,
by investor location.

Interested in understanding where we got this data from? Get in touch with us.