The Expansion of Alternative Investment Services

Table of Contents

• CHAPTER 1 THE EXPANSION OF ALTERNATIVE INVESTMENT SERVICES
  • A significant opportunity exists for wealth managers to expand their alternative product range
    • An expanded alternative investment offering can provide wealth managers with a key differentiating factor
    • Structured products and derivatives are the most commonly offered of the alternative investment products
  • Wealth managers need to ensure that they match the unique appeal of these alternative investment products to their client base
• CHAPTER 2 DERIVATIVES
  • The global growth in the derivatives market has made the products more easily accessible for wealthy investors
    • A search for greater investment exposure has driven the development of the derivatives market
    • More widespread use of derivatives and structured products yield significant benefits to investors and wealth managers
    • Open architecture, on-line delivery and bespoke product offerings mark out the key differentiators in the industry
    • Market leading: The early adoption of property derivatives by Investec Private Bank demonstrates the client value that wealth managers can create through innovative product offerings
      • Property derivatives encapsulate how derivative innovations can be used to better manage client portfolio risks and returns
      • The expansion of Investec's product range adds significant value to the services available to the bank's client base
      • As the market develops so will the investment opportunities for clients
• CHAPTER 3 ART
  • Art is emerging as a long-term investment choice among high net worth individuals
    • Strong recent global wealth creation has driven more mainstream interest in art as an investment
    • A significant private client base makes private banks an ideal avenue for art advisory services
    • The specialist nature of art investment services means they are only offered by those wealth managers with a significant client base
    • Market leading: UBS Art Banking
      • UBS' large client base affords it the potential for an extensive art banking service
      • UBS takes a long-term view over all art investment
      • Services need to be tailored to a mixture of client segments
      • UBS expects further growth in the high net worth market for art
• CHAPTER 4 COMMODITIES
  • Commodities are increasingly popular as a means of diversifying a portfolio
    • The contrast between the strong performance of commodities and the poor performance of equities has brought commodities to the attention of mainstream investors
    • The key differentiator between wealth managers is in how they seek to gain exposure to commodities
    • Structured products are the most popular, and effective, means of gaining exposure to commodities
    • Commodity collective investments form an effective, if volatile, means of gaining exposure to commodities
    • Although managed futures offer significant investment benefits, they do not represent the best way for investors to gain exposure to commodities
      • While managed futures can add significant value to an investor's portfolio ...
      • ... their suitability as a commodity investment vehicle depends on the investor's motivation
    • Exchange traded funds and commodity index investing has its drawbacks
• CHAPTER 5 APPENDIX
  • Supplementary data
  • Further Reading
    • Global Wealth Management SPP
      • Interactive Databases
      • Market Reports
      • Strategic Insight Reports
      • Wealth Management Competitor Tracker
    • Datamonitor Asia Pacific Wealth Management SPP
    • Savings and Investments SPP
      • Interactive Databases
      • Reports
      • Briefs
  • SPP writing team
  • List of Tables
    • Table 1: Selection of wealth manager alternative investment offerings (as of 2006)
    • Table 2: Art investment and advisory normally forms part of a broader advisory service
    • Table 3: Performance of Managed Futures against other asset classes 1993-2002
    • Table 4: The majority of exchange traded funds launched to data have focused on natural resources
    • Table 5: Notional amounts outstanding on International derivatives market
    • Table 6: Indexed growth in IPD Index sub-categories 1980-2004
    • Table 7: Art historical price growth by sector 1995-2005
    • Table 8: Price of gold, silver, oil, FTSE and S & P 2000 - 2006
    • Table 9: Exchange Traded Funds by assets USD bn, June 2001 to March 2005
  • List of Figures
    • Figure 1: The increased use of derivatives within wealth management has been driven by the massive expansion in the global derivatives market
    • Figure 2: Credit Suisse's on-line platform allows users to analyze and monitor the performance of nearly 2,000 different structured products
    • Figure 3: The use of property derivatives presents investors with a wide range of different investment and hedging options
    • Figure 4: The last 25 years have seen a strong bull run in UK commercial property
    • Figure 5: UK art investments have produced comparable returns to the FTSE in the last ten years, although guidance is still needed to benefit from the wide range of returns between sectors
    • Figure 6: UBS' art services have been voted "Best Art Banking in the World" in 2005
    • Figure 7: In recent years commodities have offered attractive returns for those looking to diversify away from equities
    • Figure 8: Assets held in exchange traded funds in the US have soared in the last five years