Alternatives attract the rich: C.Suisse

By Tom Burroughes

GENEVA (Reuters) - Europe's private bank clients are raising exposure to alternative assets like hedge funds, determined to grow their wealth by spreading risks, a senior Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) executive said on Tuesday.

Well-heeled private investors, who lost money when stocks fell at the end of the dotcom equity bull-market in 2000, are more focused on making an absolute gain in their wealth for the lowest-possible amount of risk, Arthur Vayloyan, head of private banking investment services and products, said.

"The Holy Grail everyone is searching for is absolute return in this risk-free area," he told a Reuters' Wealth Management summit.

Asked what share of all Credit Suisse's private client assets are held in the alternative category, Vayloyan said: "Ten percent and going upwards."

Alternative assets such as hedge funds, private equity, infrastructure and commodities, have attracted big inflows from private individual investors and institutions looking to garner returns.

Investors are increasingly dividing those assets they use to cover essential liabilities and costs and those assets used to earn returns, he said.

Alternative investments accounted for 20 percent of all holdings of high net worth individuals last year, a rise from 3 percent in 2000, according to the Merrill Lynch/CapGemini report published in June this year. The report defines such people as having financial assets of at least $1 million.

Speakers at the summit agreed that alternative investments would continue to gain ground, despite lackluster investment performance earlier in the year in some hedge fund strategies and the sharp losses in the energy market of U.S.-based hedge fund firm Amaranth in September.  Continued...