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Morgan Stanley’s Wealthy Clients Turn to Alternatives

September 11, 2020

Wealthy Morgan Stanley clients — spooked by volatile stock markets and the prospect of a Democratic win in the elections — are returning to hedge funds and other alternative investments, according to news reports

Low interest rates and near-record markets are pushing high-net-worth investors away from stocks and bonds and into hedge funds, long-short equity strategies, real estate, private equity and other alternatives, according to Ben Huneke, head of investment solutions in Morgan Stanley’s wealth management unit, Bloomberg writes. 

Affluent investors are also concerned about overconcentration in the major indices, Huneke says, according to the news service. Five technology stocks make up more than 20% of the S&P 500’s value, which had been rising for five months before slowing down last week, Bloomberg writes. 

In addition, investors are worried about the outcome of the elections and its effect on their holdings, according to the news service.

While President Donald Trump has indicated that he would lower capital gains taxes if he wins a second term, Democratic presidential candidate Joe Biden has said he would raise them, Bloomberg writes. That means investors would face a steeper tax bill selling stocks and funds that have been going up, according to the news service. 

“Everyone is looking ahead to the elections and what tax policy could look like in various administrations, not only presidential but congressional,” Huneke tells Bloomberg. 

Investors are still set on investing in stocks, but they want to “have some downside protection,” he says, according to the news service. 

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By Alex Padalka
  • To read the Bloomberg article cited in this story, click here if you have a paid subscription.
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Tags:  Investment strategies , Tax planning , Portfolio management , Morgan Stanley

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