Moonfare’s third annual investor survey shows some investors have added defensive strategies like private credit, infrastructure and secondaries to their mix, while expressing optimism about healthcare and tech and making a marked shift towards diversification.
Ongoing uncertainty about the economy means diversification remains a priority for investors looking to protect assets. But it is no surprise that tech and healthcare continue to attract money in this market.
Some 122 of Moonfare’s investors replied to the survey, which aims to understand the motivations around portfolio building among Moonfare’s individual investor community. Investor perception of the global economy has improved since last year, when 85% of respondents expressed a negative view. Nonetheless, almost half (47%) of respondents still have a “bad feeling” about the state of the economy, and just 15% a good one.
Investors are thus adding assets that might offer protection, such as secondaries, private credit and infrastructure to portfolios still largely oriented on buyouts.
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While 83% of respondents now own stakes in buyouts, up 16 percentage points from 2022, co-investments now appear in almost half (48%) of Moonfare investor portfolios, private credit in almost a quarter, with infrastructure lagging only slightly at just over 23%.
Building a more resilient portfolio for 2024
Not surprisingly, therefore, secondaries, which can usually be bought at a substantial discount, and private credit, which offers diversity of opportunity, both appear in the top three strategies about which investors are more optimistic in current economic conditions.
Moonfare founder and Co-CEO Steffen Pauls, said: “It’s gratifying to see our investors positioning themselves for both current concerns and perceived longer-term opportunities. It shows they’re taking advantage of educational opportunities, some of which Moonfare provides, and building a more resilient portfolio for themselves and their families.”
Moonfare’s investor base has made a shift towards prioritising diversification – perhaps as a response to ongoing economic uncertainty, geopolitical instability and the muted performance of traditional asset allocation during the immediate post-Covid era. The 46% who said they had newly prioritised diversification was considerably higher than the 31% who had increased cash reserves.
While the traditional 60:40 portfolio has recovered this year from losses in 2022, investors seem to fear its returns may not keep pace with the anticipated longer period of higher interest rates. As a result, over 88% of respondents stated that they plan to allocate further to private equity in the coming year. Only 3% do not expect to allocate to private equity in that timeframe.
Healthcare stocks hold the most investment potential
But investors are also positioning themselves for the future. They are particularly optimistic about the technology and healthcare sectors which, while not immune to higher rates, labour costs or broader macroeconomic uncertainty, appear well-positioned to capitalise on secular trends. 78% of Moonfare’s respondents believe healthcare holds the most investment potential, closely followed by technology (76%).
That belief in technology does not yet, however, mean Moonfare’s investors are ready to let AI do their investing for them. Only 7% of survey respondents have given robots (AI-driven advice) full autonomy to invest without their involvement. But most are at least open to doing so in the future.
