Sub-prime continues to menace

The sub-prime meltdown and the resulting credit squeeze remain a key factor in the thinking of investment professionals, according to research undertaken by financial services research house, Linchpin.

The research, released late last week, revealed that 89 per cent of investment professionals believed that the sub-prime crisis was not yet over but, despite this, many will increase their exposure to alternative investments over the next 12 months.

The Linchpin research found that 80 per cent of survey respondents remained invested in alternative investments and that more than 50 per cent indicated that they would be increasing their exposure over the next 12 months.

It said that across a range of alternative investments, infrastructure and hedge funds were the most favoured, with around 20 per cent of respondents picking the asset classes currently offering investors the best opportunities.

The research said this was followed by commodities, unlisted property, alternate yield strategies and private equities.

Commenting on the research outcome, Linchpin executive director Daniel Ratner said that the time-consuming nature of alternative investment selection plus concerns about the US sub-prime credit crisis were among the current concerns of gatekeepers.

“According to our survey, the time decision-makers need to evaluate alternative investments is disproportionate to their overall portfolio weighting of around 5 to 10 per cent,” he said.

Looking specifically at the sub-prime crisis, the survey found that 60 per cent of respondents said it had influenced their decision to change their intended asset allocation, while 90 per cent believed there was a further correction to come in the sub-prime market.