The Expansion of Alternative Investment Services

• Commodities, derivatives, futures and art can each be viewed as an invaluable addition to the alternative product ranges of wealth managers.
• Each of these investments shares the common characteristic of non-correlated returns to typical equity investments.
• However, investment qualities aside, they are arguably equally as valuable as a means for wealth managers to differentiate their services.

• Justify your company's investment in these alternative investment businesses using our assessment of the market for these asset classes.
• See best practice with our Market Leading profiles of UBS and Investec Private Bank.
• Determine the best means of giving your clients exposure to commodities with our analysis of the benefits and drawbacks of different investment methods"

CHAPTER 1 THE EXPANSION OF ALTERNATIVE INVESTMENT SERVICES

A significant opportunity exists for wealth managers to expand their alternative product range

An expanded alternative investment offering can provide wealth managers with a key differentiating factor

Structured products and derivatives are the most commonly offered of the alternative investment products

Wealth managers need to ensure that they match the unique appeal of these alternative investment products to their client base

CHAPTER 2 DERIVATIVES

The global growth in the derivatives market has made the products more easily accessible for wealthy investors

A search for greater investment exposure has driven the development of the derivatives market

More widespread use of derivatives and structured products yield significant benefits to investors and wealth managers

Open architecture, on-line delivery and bespoke product offerings mark out the key differentiators in the industry

Market leading: The early adoption of property derivatives by Investec Private Bank demonstrates the client value that wealth managers can create through innovative product offerings

CHAPTER 3 ART

Art is emerging as a long-term investment choice among high net worth individuals

Strong recent global wealth creation has driven more mainstream interest in art as an investment

A significant private client base makes private banks an ideal avenue for art advisory services

The specialist nature of art investment services means they are only offered by those wealth managers with a significant client base

Market leading: UBS Art Banking

CHAPTER 4 COMMODITIES

Commodities are increasingly popular as a means of diversifying a portfolio

The contrast between the strong performance of commodities and the poor performance of equities has brought commodities to the attention of mainstream investors

The key differentiator between wealth managers is in how they seek to gain exposure to commodities

Structured products are the most popular, and effective, means of gaining exposure to commodities

Commodity collective investments form an effective, if volatile, means of gaining exposure to commodities

Although managed futures offer significant investment benefits, they do not represent the best way for investors to gain exposure to commodities

Exchange traded funds and commodity index investing has its drawbacks

CHAPTER 5 APPENDIX

Supplementary data

Further Reading

Global Wealth Management SPP

Datamonitor Asia Pacific Wealth Management SPP

Savings and Investments SPP

SPP writing team

LIST OF TABLES

Table 1: Selection of wealth manager alternative investment offerings (as of 2006)

Table 2: Art investment and advisory normally forms part of a broader advisory service

Table 3: Performance of Managed Futures against other asset classes 1993-2002

Table 4: The majority of exchange traded funds launched to data have focused on natural resources

Table 5: Notional amounts outstanding on International derivatives market

Table 6: Indexed growth in IPD Index sub-categories 1980-2004

Table 7: Art historical price growth by sector 1995-2005

Table 8: Price of gold, silver, oil, FTSE and S & P 2000-2006

Table 9: Exchange Traded Funds by assets USD bn, June 2001 to March 2005

LIST OF FIGURES

Figure 1: The increased use of derivatives within wealth management has been driven by the massive expansion in the global derivatives market

Figure 2: Credit Suisse’s on-line platform allows users to analyze and monitor the performance of nearly 2,000 different structured products

Figure 3: The use of property derivatives presents investors with a wide range of different investment and hedging options

Figure 4: The last 25 years have seen a strong bull run in UK commercial property

Figure 5: UK art investments have produced comparable returns to the FTSE in the last ten years, although guidance is still needed to benefit from the wide range of returns between sectors

Figure 6: UBS’ art services have been voted “Best Art Banking in the World” in 2005

Figure 7: In recent years commodities have offered attractive returns for those looking to diversify away from equities

Figure 8: Assets held in exchange traded funds in the US have soared in the last five years