Wealthy investors prefer paltry returns to risk

LONDON (Reuters) - Wealthy investors battered and bruised by a financial and economic crisis with no clear end in sight, look set to sit out the storm on the sidelines heading into 2012, content to keep a lid on losses, a survey has found.

A poll of nearly 800 people in the UK worth at least 100,000 pounds found more than 80 percent believed taking on more risk now would result in losing more money.

More than half of the respondents to the survey carried out by Natixis Global Asset Management placed stability as their number one priority.

But sacrificing riskier options for safety could see investors squandering opportunities.

"The pendulum may have swung too far in terms of risk aversion, causing individual investors to shun investment options that are designed to grow portfolios while minimising risk in volatile environments," said John Hailer, president and CEO of Natixis Global Asset Management, U.S. and Asia.

Investors may be risk averse but they also suffer from a lack of knowledge surrounding alternative investments, the survey showed. Nearly half of respondents admitted to having "no idea" about the asset class.

"More education is clearly needed on alternatives," Hailer said.

Alternative investments range from hedge funds and infrastructure to wine and art. They are conventionally less liquid than traditional assets and therefore deemed more risky.

A separate report published on Tuesday by UK wealth management firm Williams de Broë WDB.L also warned that private investors who fail to exploit low interest rates and heightened volatility could be left with few rewards.

"In order for portfolios to provide returns that are more than paltry, investors must take on greater risk at a time when the volatility of equity markets is highly likely to become ever greater. It is a difficult circle to square," said Jim Wood-Smith, Head of Research at WDB.

(Reporting By Anjuli Davies; Editing by Helen Massy-Beresford)