Alternatives

Of course, the enthusiasm for equities and property noted in previous sections may be less a rational calculation, and more a case of simply trusting the familiar. A dissection of the responses on private equity and hedge funds, two asset classes which have often not had a good press over the last few years, provides some support for this hypothesis.

On the face of it, these asset classes appear to have relatively few admirers among the survey respondents. However, if you strip out the "don't know" responses - which were, as one would expect, widespread for both asset classes - then amongst those who had an opinion, the enthusiasm for these alternative asset classes increases. Over two-thirds of those who have an opinion believe that hedge funds will perform very or quite well over the next five years; an even higher share (76%) think this of private equity. And, even on a one-year basis, enthusiasm for private equity and hedge funds is approaching that for equities and property. Of course, a belief that an asset class will do well may not translate into actual investment if the risks perceived are substantial.