PENSCO Survey: IRA Investors Increasing Allocations to Non-Traded Alternatives

Dec 4 2015 | 7:06pm ET

A new PENSCO survey shows self-directed IRA investors are increasingly looking to increase portfolio diversification by buying more non-traded alternative assets.

The well-known alternative asset custodian asked investors about their attitudes and behaviors related to non-traded alternative assets for retirement accounts. Key findings:

  • 62% of respondents said they have already increased their allocation to non-traded alternatives or plan to as a result of the market volatility. 
  • 25% said they intend to increase their allocation to non-traded alternatives in the next five years.
  • 27% said the most popular reason for seeking out non-traded alternatives for an IRA portfolio, is to improve diversification and risk-return characteristics. 
  • 26% said non-traded alternatives provide an opportunity to invest in businesses, sectors, and industries about which they have personal knowledge or expertise. 
  • 16% felt the most significant benefit of non-traded alternatives is the potential to generate income for their retirement portfolio.
  • The most widely sought after asset classes for self-directed IRA investors are real estate and private equity, with 52% saying they are likely to increase allocations to real estate and 25% likely to increase allocations to private equity 

“Our survey found that compared to last year, investors now experience fewer hurdles to investing in non-traded alternatives, and they possess a better understanding of how to use an IRA to invest in various alternative asset classes,” said Kelly Rodriques, chief executive officer of PENSCO, in a statement.  “We anticipate that self-directed IRA investors will continue pursuing non-traded alternatives that have different risk and return profiles from traditional stocks and bonds.” 

PENSCO added that regulatory changes, such as Title III of the JOBS Act, will eventually pave the way for everyday investors to get access to private placements through online portals. Interestingly, many PENSCO investors surveyed are already exploring these opportunities - close to 30% of respondents already have some level of understanding of how to invest in private equity through a crowdfunding platform.

Founded in 1989, PENSCO Trust Company is the custodian of over $10 billion in assets on behalf of more than 45,000 clients. 


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