HNW Asset Allocation Trends 2017

Powered by

All the vital news, analysis, and commentary curated by our industry experts.

HNW investment preferences are the result of an 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. However, falling or stagnating property prices in some countries in these regions are set to cub investor demand over the next 12 months. In the West, investors are more willing to embrace risk and HNW clients favor equities, hoping that index movements will continue to provide opportunities. We also forecast increasing demand for alternatives, as HNW investors are looking for new means of diversification; however, a certain amount of hand holding will be required to capitalize on rising demand for the asset class.

This report draws on our 2016 Global Wealth Managers Survey to analyze HNW asset allocation strategies in 17 key markets. In particular, it examines the drivers behind investment choices now and over the next 12 months.

Specifically the report –
– Analyzes HNW asset allocation strategies in 17 key HNW markets, including Australia, the UK, and the US.
– Examines the drivers that determine HNW investment preferences.
– Interprets macroeconomic, demographic, and attitudinal trends, such as risk preferences that are shaping HNW investment behavior.

The report is accompanied by an online interactive dashboard to enable users to select and view the data of their choosing.

Scope

– 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.

ANZ
Deutsche Bank
JPMorgan
and UBS
Eiffel Management
Dubai Islamic Bank
Mashreq Bank
Scotiabank
Commonwealth Bank of Australia

Table of Contents

Table of Contents

EXECUTIVE SUMMARY 2

1.1. HNW investments preferences are shaped by a multitude of factors 2

1.2. Key findings 2

1.3. Critical success factors 2

2. REGIONAL ASSET ALLOCATION TRENDS 9

2.1. The global HNW portfolio is well diversified 9

2.1.1. The typical HNW portfolio is increasingly exposed to risk assets 9

2.1.2. The recent commodity price rebound has yet to manifest itself in the average HNW portfolio 10

2.1.3. The allure of property as an investment option has somewhat faded 11

2.2. HNW investors have strong appetite for direct equity, local currency products, equity funds, and bond funds 12

2.2.1. Equity funds and ETFs are becoming increasingly popular 12

2.2.2. While the average HNW bond portfolio is well-diversified, bond funds continue to dominate 13

2.2.3. Local currency products prevail as part of HNW investors’ cash investments, but there are exceptions 15

2.2.4. Offering REITs is a must in the HNW space 16

2.2.5. Hedge funds are the preferred alternative investment product among HNW investors 17

2.2.6. Funds are the go-to investment when it comes to commodities 18

2.3. There are significant regional differences when it comes to HNW investors’ asset allocation preferences 19

2.3.1. HNW investors in the West are significantly exposed to equity risk 19

2.3.2. Real estate features prominently in the typical HNW portfolio in Asia Pacific and the Middle East and Africa 20

2.3.3. Commodity holdings can be found across the world, but are particularly pronounced in Asia Pacific 21

2.3.4. Demand for alternatives is particularly strong in North America and Asia 22

3. HNW INVESTMENT DRIVERS 23

3.1. Equity holdings are driven by capital appreciation opportunities 23

3.1.1. Cheap buying opportunities are driving equity investments 23

3.1.2. Capital appreciation potential will continue to drive HNW demand, but not everywhere 24

3.2. Dividend income as a driver of equity investments is becoming increasingly important 26

3.2.1. Geographic diversification is driving equity investment in Russia 27

3.3. Bonds are traditionally important to risk-averse HNW individuals 28

3.3.1. Quantitative easing and political uncertainty will continue to have a negative effect on bond holdings in Europe 28

3.3.2. Risk aversion and asset diversification are the main drivers of bond investments 29

3.3.3. Current returns are important considerations in many emerging markets, and wealth managers will do well to educate clients about the risks involved 30

3.4. Cash and near-cash products are favored as a means of “parking” wealth and maintaining liquidity 31

3.4.1. HNW investors are forecast to increase their cash holdings, albeit only slightly 31

3.4.2. Being ready for future investment opportunities and a desire to maintain liquidity are the top drivers for cash investments 32

3.4.3. Rising consumer confidence will have an adverse effect on deposit holdings in Europe 34

3.4.4. The uptake of financial advice will lead to further portfolio diversification away from deposits – at least in some markets 35

3.5. Real estate investments are driven by price movements and a desire to be able to rely on rental income 36

3.5.1. Global HNW investments in real estate are forecast to rise 36

3.5.2. Property price movements and rental yields are the main drivers for HNW investments in real estate 37

3.5.3. Price appreciation is of particular importance in Asia 38

3.5.4. In Europe the perception of safety, diversification benefits, and rental income are more important than capital growth 39

3.6. Alternative investments are becoming increasingly important for their diversification benefits 40

3.6.1. HNW demand for alternatives is forecast to increase in all but one country 40

3.6.2. Asset diversification benefits have emerged as the top driver for HNW alternative investments 41

3.6.3. Future capital appreciation remains important, but less so than a year ago 41

3.6.4. Expansion of P2P lending and crowd-funding platforms is driving demand for alternatives in Hong Kong 42

3.6.5. Other HNW drivers for alternatives include dissatisfaction with traditional asset classes, the perception of exclusivity, and current returns 43

3.7. Commodities largely act as a diversifier, but capital appreciation opportunities seem appealing too 43

3.7.1. Demand for commodities is set to rise in the majority of countries surveyed 43

3.7.2. Their reputation as an important diversifier has seen commodities become an integral part of the typical HNW portfolio 44

3.7.3. HNW investors in Asia Pacific are betting on capital appreciation opportunities 45

3.7.4. The perception of safety is becoming an increasingly important driver in the commodity sphere 46

4. APPENDIX 47

4.1. Abbreviations and acronyms 47

4.2. Supplementary data 47

4.3. Definitions 52

4.3.1. HNW 52

4.3.2. Liquid assets 52

4.4. Methodology 53

4.4.1. GlobalData’s 2016 Global Wealth Managers Survey 53

4.4.2. GlobalData’s 2015 Global Wealth Managers Survey 53

4.5. Bibliography 53

4.6. Further reading 54

Table

List of Tables

Table 1: Importance of dividend income as a driver for equities; dividend growth (%); and dividend income ($bn), 2016 26

Table 2: Equity index movements and gross rental yields in Europe, 2016 39

Table 3: HNW investment drivers by country: equities, 2016 47

Table 4: HNW investment drivers by country: bonds, 2016 48

Table 5: HNW investment drivers by country: cash and near-cash products, 2016 49

Table 6: HNW investment drivers by country: property, 2016 50

Table 7: HNW investment drivers by country: alternatives, 2016 51

Table 8: HNW investment drivers by country: commodities, 2016 52

Figures

List of Figures

Figure 1: The typical HNW portfolio is becoming increasingly exposed to risk assets 10

Figure 2: Commodity prices have rebounded but remain low 11

Figure 3: The IMF’s Global House Price Index has almost reached 2008 levels 12

Figure 4: Direct equity investments constitute the single largest component, but taken together fund holdings dominate 13

Figure 5: Emerging markets are still considered an attractive investment destination 14

Figure 6: Bond funds form the largest component of HNW investors’ fixed-income investments 15

Figure 7: Local currency products are the most common type of cash investment 16

Figure 8: A significant proportion of HNW wealth is locked up in property 17

Figure 9: Hedge funds dominate in HNW investors’ alternatives portfolios 18

Figure 10: Mutual funds form the largest component of HNW investors’ commodity investments 19

Figure 11: Global markets have been subject to significant volatility 20

Figure 12: Investors’ attitude towards risk differs significantly across the globe 22

Figure 13: The majority of wealth managers expect HNW equity demand to rise 23

Figure 14: Capital appreciation opportunities are motivating HNW investors to channel their wealth into equities 24

Figure 15: HNW investors are becoming more inclined to seek financial advice 25

Figure 16: Geographic diversification benefits are a key consideration among Russian HNW investors 27

Figure 17: Global demand for bond holdings will be varied 29

Figure 18: Risk aversion is driving bond investments in the HNW space 30

Figure 19: Global HNW cash holdings will increase over the next 12 months 32

Figure 20: HNW investors in Germany are looking for cheap buying opportunities 33

Figure 21: Being ready for future investment opportunities is the top driver for cash investments 34

Figure 22: Rising consumer confidence will result in deposit holdings declining 35

Figure 23: There is a significant opportunity to be had in China 36

Figure 24: HNW property investments are largely forecast to rise over the next 12 months 37

Figure 25: Property price appreciation is the number one driver of real estate investments 38

Figure 26: HNW demand for alternatives in Australia is forecast to skyrocket 40

Figure 27: Capital appreciation is the number one driver of alternative investments 42

Figure 28: Commodity holdings are set to increase in the HNW space 44

Figure 29: The benefits of asset diversification are driving commodity investments 45

Frequently asked questions

HNW Asset Allocation Trends 2017 thematic reports
Currency USD
$5,250

Can be used by individual purchaser only

$15,750

Can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company


Undecided about purchasing this report?

Enquire Before Buying Request a Free Sample

Get in touch to find out about multi-purchase discounts

reportstore@globaldata.com
Tel +44 20 7947 2745

Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.

Sample Report

HNW Asset Allocation Trends 2017 was curated by the best experts in the industry and we are confident about its unique quality. However, we want you to make the most beneficial decision for your business, so we offer free sample pages to help you:

  • Assess the relevance of the report
  • Evaluate the quality of the report
  • Justify the cost

Download your copy of the sample report and make an informed decision about whether the full report will provide you with the insights and information you need.

Below is a sample report to understand what you are buying

See what our customers are saying

“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.

GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”

Business Intelligence & Marketing Manager, SAL Heavy Lift

“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”

Market Analyst & Management, Liebherr-Werk

Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.

Head of Key Accounts, Saab AB

Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.

Marketing Intelligence Manager, Portugal Foods

Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.

I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.

I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.

Head of Customer Insight and Research, Standard Chartered

“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.

Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”

Head of Consumer Sensory Insights, Givaudan

GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise.  The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.

I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.

One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.

Senior Account Manager, TSYS
Go even deeper with GlobalData Intelligence Center

Every Company Report we produce is powered by the GlobalData Intelligence Center.

Subscribing to our intelligence platform means you can monitor developments at HNW Asset Allocation Trends 2017 in real time.

  • Access a live HNW Asset Allocation Trends 2017 dashboard for 12 months, with up-to-the-minute insights.
  • Fuel your decision making with real-time deal coverage and media activity.
  • Turn insights on financials, deals, products and pipelines into powerful agents of commercial advantage.