HNW Asset Allocation Trends
All the vital news, analysis, and commentary curated by our industry experts.
The most striking trend is the surge in alternatives, which constitute an increasingly large share of the typical portfolio as investors seek diversification from traditional investments. We are also seeing rising demand for exchange-traded funds, which thanks to the diversification they provide and their low costs are rapidly growing in popularity. Drawn in by capital appreciation opportunities, investors are forecast to channel more wealth into equities. This trend will be particularly pronounced in Europe, where investors are hoping that loose monetary conditions will finally stimulate equity markets. In the fixed income space, HNW investors are moving out of high-yield bonds, with investor concern mounting as volatility in the junk bond market persists. In many global markets wealth managers will have a tough time promoting bond holdings in general. Their best bet will be bond funds thanks to the diversification benefits they provide.
Verdict Financial’s “HNW Asset Allocation Trends” draws on our 2015 Global Wealth Managers Survey to analyze HNW asset allocation strategies in 20 key markets. In particular, it examines the drivers behind investment choices now and over the next 12 months. Draws on our proprietary 2015 Global Wealth Managers Survey to present consistent data across 20 markets.
• Analyze HNW asset allocation strategies in 20 key HNW markets including Australia, the UK, and the US.
• Understand the drivers that determine HNW investment preferences.
• Interpret the macroeconomic, demographic, and attitudinal trends that are shaping HNW investment behavior.
• Accompanied by an online interactive dashboard to enable users to select and view the data of their choosing.
Reasons to Buy
Get fact-based insight into HNW investors’ asset allocation preferences from our proprietary 2015 Global Wealth Managers Survey.
Remain a step ahead of competitors by anticipating investment trends and adjusting your service proposition accordingly to cater to HNW investors’ changing investment preferences.
Be able to service HNW investors more thoroughly by understanding what is driving investment choices and how asset allocation strategies are going to change over the next 12 months.
Table of Contents
HNW investment preferences are shaped by a multitude of factors
Critical success factors
REGIONAL ASSET ALLOCATION TRENDS
The global HNW portfolio is well diversified
Equities dominate the typical HNW portfolio
Alternative investments have become more popular, at the expense of bonds
Despite recent downturns, commodities continue to find a place in the typical HNW portfolio
Detailed analysis shows HNW investors have strong appetite for direct equity, local currency products, equity funds, and direct property
Direct holdings constitute the bulk of equity investments, but ETPs are growing in popularity
Bond funds are the preferred type of fixed income investment
Local currency products prevail as part of HNW investors' cash investments, but there are exceptions
High direct property holdings limit wealth managers' fee-earning potential
Hedge funds have emerged as the preferred alternative investment among HNW investors
Commodity ETPs have overtaken mutual funds in popularity
There are significant regional differences when it comes to HNW investors' asset allocation preferences
The typical HNW portfolio in the West and the Middle East and Africa is heavily skewed towards equities
Real estate features prominently in the typical HNW portfolio in Asia Pacific and the Middle East and Africa
The drop in commodity prices hit investors in resource-rich countries hard
Demand for alternatives is particularly strong in North America
HNW INVESTMENT DRIVERS
Equity holdings are driven by the capital appreciation opportunities they provide
Positive stock market conditions are driving equity investments
Capital appreciation opportunities will continue to drive HNW demand, but not everywhere
Dividend income as a driver of equity investments is of particular importance in a number of countries
Bonds are traditionally important to risk-averse HNW individuals
Quantitative easing in Europe will continue to have a negative effect on bond holdings
Risk aversion and asset diversification are the main drivers of bond investments
Current returns are driving bond holdings in emerging markets, and wealth managers will do well to educate clients about the risks involved
Cash and near-cash products are favored as a means of maintaining liquidity
HNW investors are forecast to reduce their cash holdings, albeit only slightly
Risk aversion and a desire to maintain liquidity are the top two drivers for cash investments
Rising consumer confidence will have an adverse effect on deposit holdings in Europe
Education is key to lure clients away from deposits in certain markets
Real estate investments are driven by HNW investors' desire to be able to rely on rental income
Global HNW investments in real estate are forecast to rise
Rental yields and property price movements are the main drivers for HNW investments in real estate
Economic distress is driving demand for real estate in Russia
Alternative investments are becoming increasingly important for their diversification benefits
HNW demand for alternatives is forecast to increase in all but one country
Future capital appreciation is the primary driver of alternatives demand
HNW individuals also invest in alternatives to diversify their portfolio
Going forward, we expect dissatisfaction with traditional asset classes as a driver for alternatives to become more important
Other HNW drivers for alternatives include the perception of exclusivity and current returns
Commodities largely act as a diversifier in the average HNW portfolio
Demand for commodities is set to rise, but only for selected products
Their reputation as an important diversifier has seen commodities become an integral part of the typical HNW portfolio
HNW investors are also betting on capital appreciation opportunities in the commodity space
Abbreviations and acronyms
Verdict Financial's 2015 Global Wealth Managers Survey
Verdict Financial's 2014 Global Wealth Managers Survey
Verdict Financial's 2013 Global Wealth Managers Survey
About Verdict Financial
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