Opening the Door to Alternatives (Goldman Sachs Asset Management)

Summary

• Alternatives assets under management among individual investors are estimated at around $4 trillion, with potential growth to $12 trillion in the next decade.p.2
• The survey covers 1,000 US-based high-net-worth and ultra-high-net-worth individuals.p.2
• 39% of households with $1-5 million in investable assets use alternatives, rising to 63% at $5-10 million, 80% above $10 million and 91% above $20 million.p.3
• 56% of investors label alternatives as high risk, versus 39% of users and 73% of non-users.p.5
• Investors with over $10 million allocate 15% of portfolios to alternatives, compared to 8% for households with $1-5 million.p.5
• Performance (46%) and diversification (34%) are the primary drivers for allocating or increasing alternatives exposure.p.5

Key insights

1. 95% of wealthy individuals regularly save money each month, averaging 18% of their income.p.3
2. Private real estate is the most used alternative, followed by private equity.p.4
3. Current users emphasize performance (59%), fees (46%) and risk (45%) when evaluating alternatives.p.5
4. Alternatives adoption hits an inflection point at $5 million+ and becomes mainstream at $10 million+.p.3
5. Home costs (76%) and taxes (69%) are the two largest annual expenses.p.4