Study: Wealth managers reconsider listed private equity

After a year in which almost half of them scaled back their allocations to listed private equity stocks, wealth managers in Europe are starting to look again.

After a tough year for listed private equity stocks, European wealth managers are becoming better disposed towards the asset class and likely to increase their exposure during 2010, according to a survey commissioned by LPEQ, the association for listed private equity vehicles.

Over half – or 53 percent – of those who already invest in listed private equity intend to increase their
allocation in the coming year. This comes after a 12 month period in which 47 percent of listed private equity holders reduced their allocation to it.

Awareness amongst wealth managers of listed private equity has increased, according to the survey.

Listed private equity stocks have had a tumultuous time during the credit crunch. Over the 12 months between August 2008 and August 2009, listed private equity globally lost 33 percent of its value, according to Standard & Poors’ Global Index Services. The wider market, as represented by S&P’s Broad Market Index, actually showed a marginal increase of 1 percent.  

As a result of listed private equity being hit hard over the last year, wealth managers’ faith in the asset class has been shaken. In last year’s survey by LPEQ 73 percent of respondents agree that listed private equity has “good long-term performance”. This year the agreement rate was down to 44 percent.

Currently private equity trusts listed on the London Stock Exchange are trading at an average discount to net asset value of around 36 percent.