HNW clients tempted back to equities

High-net-worth (HNW) clients who see signs of a market recovery will not shy away from equities, as they see an opportunity to pick up undervalued stocks.

According to a new survey conducted by Datamonitor, client demand is expected to be so strong in the area of direct equities that 44 per cent of the wealth managers questioned said they will invest more resources into these products over the next two years. Wealth managers who serve the financial needs of HNW individuals said they expect over 90 per cent of their clients will demand direct equity investments over the period.

It is expected that wealthy Australians will have the majority of their money invested in equities over the next two years and that HNW clients will have a quarter of their total investment portfolio in equities by 2011.

Datamonitor wealth analyst David Lalich said while these clients have learnt the lessons from the equity crash they will not be discouraged, as they see signs of a recovery.

“These are typically opportunistic individuals who want exposure to the best opportunities for growth in the market,” he said.

Australia’s near miss of a technical recession with a growth in gross domestic product of 0.4 per cent for the March 2009 quarter coupled with an increase in confidence as the local stock market increased around 30 per cent from its recent lows has boosted investor confidence.

“There is no certainty that the stock market has bottomed out already, however, there are signs emerging that the worst might be over,” said Lalich.

“Stock prices have fallen so much over the past 18 months that some investors are starting to view them as undervalued.”