Founded in 1920, the LGT private banking and asset management group is fully owned and managed by the Princely Family of Liechtenstein and has been advising clients on the merits of alternative investments for more than 20 years. Alternatives help improve portfolios’ risk/return characteristics, yet even clients with the required experience and long-term investment horizon are “very often under-allocated”, says Olivier de Perregaux, CEO at LGT Private Banking. There has, however, been “a steady increase” in private client demand for alternatives over the past five years, especially in private equity (PE), and this trend is expected to continue in the coming years. In particular, private clients have shown increased appetite for PE offerings with a “strong environmental, social and governance/impact focus”. While LGT’s discretionary portfolio management solutions have a 12 per cent strategic allocation to alternatives, private clients with a more growth-oriented risk profile can invest alongside the LGT Princely Strategy, which is one of the largest endowment funds in Europe, with a strategic allocation of more than 50 per cent to alternatives and private markets.
LGT’s flagship product allows clients to benefit from an alignment of interests with the firm’s owner and gain access to a broad range of alternative solutions offered by sister companies LGT Capital Partners and impact investing PE firm Lightrock. High net worth customers also benefit from the industry network LGT has built over several years. “This is important because for many alternative asset classes, the key to achieving good performance is having access to managers and strategies that are often closed to the broad public,” explains Mr de Perregaux. Although PE risk-adjusted returns are expected to decrease compared to the past 10 years, LGT still predicts a 5 per cent points premium for a diversified PE portfolio over public equities going forward. Over the past 12 months alone, the average return across all PE funds managed by LGT Capital Partners has been around 50 per cent. Low interest rates, high market liquidity and strong investor demand led to high realised returns at low market volatility, when selecting the right private equity provider, he says. “There is reason to believe that this will normalise over the coming years.” ET