HNW investment preferences are the result of interplay between a multitude of factors, such as macroeconomic and political conditions, risk-preferences, demographic factors, and investor attitudes. Over the next 12 months we expect further portfolio reallocation to benefit risk assets, as HNW investors globally are looking for cheap buying opportunities amid turbulent market conditions. However, there continue to be significant regional differences. The typical HNW portfolio in Asia Pacific and the Middle East is significantly more conservative than elsewhere globally, with above-average allocations to property and cash and near-cash products.
Critical success factors
Manage client expectations: Drawn in by cheap buying opportunities, investors are forecast to channel more wealth into equities. However, investors in many parts of the world are already significantly exposed to this asset class, and global volatility is unlikely to subside anytime soon. Wealth managers need to ensure that clients understand the risks involved. Depending on investors’ risk preferences, a defensive strategy may still be advisable.
Broaden your investment proposition: Sophisticated investment products will always find their way into the typical HNW portfolio, but exchange-traded products (ETPs) are rapidly growing in popularity. Wealth managers targeting HNW investors need to offer these products in addition to more complex private banking products.
Adapt to local market conditions: One strategy does not fit all, and wealth managers with a global reach have to align their service propositions to highly diverse regional investment preferences. As macroeconomic conditions continue to diverge in different regions of the world, localized strategies will become even more important.
The report HNW Asset Allocation Trends 2017” provides analysis of HNW asset allocation strategies in 17 key markets, including Australia, the UK, and the US.
In particular, this report provides the following -
Examines the drivers that determine HNW investment preferences.
Interprets macroeconomic, demographic, and attitudinal trends, such as risk preferences that are shaping HNW investment behavior.
To understand investment trends, and adjust your service proposition based on a detailed understanding of HNW investors’ investment preferences.
Companies mentioned in this report: ANZ, Deutsche Bank, JPMorgan, and UBS, Eiffel Management, Dubai Islamic Bank, Mashreq Bank, Scotiabank, Commonwealth Bank of Australia.
The most striking trend in 2016 was the surge of risk assets, as investors are more willing to take on risk in the current low-yield environment.
HNW equity holdings will experience the biggest increase in demand as HNW investors continue to look for capital appreciation opportunities, hoping to take advantage of cheap buying opportunities.
The typical HNW real estate portfolio is increasingly skewed towards non-direct property investments; offering real estate investment trusts (REITs) is a must in the HNW space.
We forecast increased demand for commodities, which are regarded as a wider markets hedge. This will drive demand for gold in particular. However, betting on a sustained commodity price rebound will lead to further diversification.
Alternatives are becoming an increasingly attractive diversifier, as investors are losing faith in bonds and are looking for returns elsewhere. Asset diversification is the single most important driver for alternatives.
Reasons to buy
Understand how to best promote investment products by learning what is driving investment choices.
Understand investment trends, and adjust your service proposition based on a detailed understanding of HNW investors’ investment preferences.
Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investment drivers.
Learn how and why investment preferences will change over the next 12 months.