Investors bet big on private equity despite tax fears
High net worth UK investors are more positive on private equity than every other asset class, despite fears that tax changes could scupper positive returns, according to a new survey.
Some 80 per cent of UK high net worth individuals said they planned to allocate to private equity and other alternative assets over the next year, according to data from Connection Capital.
Despite the bullishness for private equity, the 133 investors that were surveyed reported being neutral on the overall landscape for investing.
The survey also contained signs of optimism for the UK economy, with a third of investors feeling more confident about putting money into British companies, compared to a fifth who feel less confident about it.
For those positive on the prospects for UK companies, “value for money in UK equity
markets” was the main reason given, as UK equities remain comparably low to international peers.
However, investors were most worried about political change, along with potential changes to capital gains tax and business asset relief, giving it as their main justification as to why they were feeling less confident on prospects for UK companies.
When asked about the impact of a potential increase in capital gains tax, half of all respondents suggested they would invest less in equities than they had otherwise planned, with seven per cent stating they would consider stopping investment in equities all together.
Claire Madden, founder and managing partner at Connection Capital, said: “The economic travails of the past two years plus uncertainty about the new government’s policies on support for those investing in UK companies is undoubtedly responsible for an overall feeling of neutrality on the current market environment.”