Invest more - but lack diversification opportunities
Investing directly in startups or in established companies - that's what Swiss investors would like to do. But the opportunity is lacking. This is shown by a study conducted by the investor app Splint Invest. The result: 9 out of 10 investors already invest in traditional investments, but would also like to see accessible alternative investments.
In a study of the investor app Splint Invest (known among other things also by the TV show "The Lion's Den Switzerland), a small, albeit representative, sample of private investors from German-speaking Switzerland was surveyed. Of the 61 respondents, 56 invested in traditional investments at the time of the survey. First and foremost in ETFs. However, a large proportion of the participants wanted to invest more - 85.7% of the respondents stated this. Preferably in alternative investments. The problem is that there is a lack of access.
This does not mean that investors do not know where they can invest alternatively. Rather, the problem is financial. Access to alternative investments is made more difficult by high investment amounts. Plus: The fact that often only large amounts can be invested means that there are legal requirementswho is allowed to invest in alternative investments. In short, this means that anyone who is not a millionaire will have difficulty finding alternative investments that can actually be used. Yet the need is certainly there. 17% of the interested investors - and thus almost one in five - would like to invest CHF 1,000-2,000 per month in alternative investments. 38.3% would like to invest CHF 250-999 per month. 44.7% would like to invest CHF 50-249 per month.
Legal restrictionsnkings forr private investors
In addition to the financial hurdles, however, there are also obstacles of a legal nature. In Switzerland, alternative investments are regulated by the Federal Act on Collective Investment Schemes. Only qualified investors may be used in collective investments (KAG) invest. This also includes private individuals, but only those who are wealthy. These include either investors "who, by virtue of personal education and professional experience or comparable experience in the financial sector, possess[ed] the knowledge necessary to understand the risks of the investments" and at the same time have assets of at least 500,000 Swiss francs. Or investors who have assets of at least 5 million Swiss francs.
In demand are investment möOpportunities in Private Equity & Venture Capital Funds
The figures from the survey show: The willingness to invest is there. However, the majority of respondents do not want to invest more than CHF 50 to 999 per month in alternative investments. "Investors are particularly interested in investing in private equity and venture capital funds," says Mario von Bergen, Head of Investments and Co-Founder of Splint Invest. "But a majority of respondents would also like to invest in established companies or in startups. But this is hardly possible with amounts below CHF 1000 per month."
Due to the fact that there are both legal and financial limits on which products may be offered to retail investors, there are always companies within the industry that set up constructs in order to be able to offer alternative investments. This is a logical consequence of the increasing demand for alternative investments among retail investors. The problem is that these constructs often involve unnecessary counterparty risks and often do not allow direct investments but only investments via certificates or similar products.
Another difficulty is that, because some alternative investments cannot be offered to retail investors, retail investors are forced to switch to higher-risk products. The goal of protecting retail investors is therefore not achieved.
What woulds discouraging private investors from investing in alternative assets?
Private investors would like to invest in alternative investments - at least according to the respondents. But they don't. Firstly, because retail investors want to invest on a monthly basis, as they are still in the phase of building up capital. One-off investments in large amounts are therefore not optimal. For another, retail investors want to achieve adequate diversification. But this is only possible if they can invest in several alternative investments - which again means enormous financial pressure.
Several alternative investments in small amounts would be optimal. In this way, private investors could invest their money in a broadly diversified manner and at the same time regularly invest small amounts. In this way, assets are built up piece by piece over the long term. The option to exit should be available at any time. For example, if the private financial situation changes.
New MöOpportunities forr Retail investors
The figures of the Splint Invest survey speak a clear language. But how can the problems of retail investors be solved? Aurelio Perucca, CEO and Co-Founder of Splint Invest, has two suggestions: "Revising the laws or unblocking the products for retail investors would be a first step. Also, increased regulation at the provider level would provide more certainty, while less to no regulation at the product level would allow more opportunities." This approach would also alleviate the issues surrounding the regulation of cryptocurrencies, Perucca says.
Until that happens, private investors from Switzerland will lack access to alternative investments. Although solutions to the dilemma are already being worked on. Von Bergen and Perucca have created a tool with their app Splint Invest that allows investors to make monthly investments in amounts starting at 50 euros. The focus is on luxury items, such as rare whiskey or limited edition handbags, which are purchased and stored safely through Splint Invest. The investors share the costs for the respective luxury items among themselves. And jointly profit from the accrued return.
Source and further information: Splint Invest
