HNW Asset Allocation Trends 2019

2019-04-30
Price :
Published : Apr-2019
No. of Pages : 52
Table of Contents
1. EXECUTIVE SUMMARY
1.1. Diversification should form the basis of asset allocation decisions
1.2. Key findings
1.3. Critical success factors
2. REGIONAL ASSET ALLOCATION TRENDS
2.1. 2018 left market participants disappointed, and 2019 is making them nervous
2.1.1. Challenging market conditions will provide new issues to overcome
2.1.2. Equity holdings have been on the rise, leaving HNW investors exposed to significant risk
2.1.3. Cash and near-cash investments are of little appeal to HNW investors, but this is changing in a number of countries
2.1.4. HNW commodity exposure has reached an all-time low
2.1.5. Globally the allure of property is fading, but the picture looks more varied on a country level
2.2. HNW investors seek a balance between liquidity and direct market exposure
2.2.1. ETFs are becoming increasingly popular
2.2.2. Equities: Funds and ETFs outweigh direct holdings
2.2.3. Bonds: The average HNW fixed-income portfolio is diversified, but direct investments dominate
2.2.4. Cash and near-cash products: Local currency deposits prevail as part of HNW investors' cash investments, but there are exceptions
2.2.5. Property: Offering REITs is a must in the HNW space
2.2.6. Alternatives: Hedge funds are the favored alternative investment among HNW investors
2.2.7. Commodities: Funds and ETFs are the go-to investment, but gold captures significant demand
2.3. Local conditions significantly influence HNW investors' asset allocation preferences
2.3.1. HNW investors in North America are significantly exposed to equity risk
2.3.2. The European HNW portfolio is somewhat more diversified
2.3.3. Property is deeply engrained in Asian culture, and the HNW segment is no exception
3. HNW INVESTMENT DRIVERS
3.1. Fear that the bull run is coming to an end is forcing HNW investors to review their portfolios
3.1.1. Diversification is a major theme across asset classes
3.1.2. Uncertainty is the core issue to address in 2019 investment strategies
3.2. A focus on diversification will drive demand for alternatives, but a bit of handholding is needed
3.2.1. HNW investors are showing increasing interest in alternatives, while demand for fixed-income products is decreasing
3.2.2. Alternatives have the potential to add further diversification, but trust and client education are a prerequisite to drive uptake
3.2.3. Promoting more exclusive alternatives will drive demand for the asset class in Canada, France, and India
3.3. Bulletproofing HNW investors' portfolios against increased volatility must be a priority
3.3.1. Downward volatility has the potential to cause significant customer churn
3.3.2. Diversification in the equity space has to become more important
3.4. Providing cash management tools is a must as liquidity concerns are driving demand for cash and near-cash products
3.4.1. Many investors betting on higher rates will be disappointed
3.5. HNW investors are looking towards property and equity investments for a stable income stream
3.5.1. The stable income from real estate makes the asset class an appealing investment
3.5.2. Weak rental yields in the developed world call for a reshuffle of investors' property portfolio
3.5.3. Wealth managers should put an increased focus on dividend stocks and funds
4. APPENDIX
4.1. Abbreviations and acronyms
4.2. Supplementary data
4.3. Definitions
4.3.1. HNW
4.3.2. Liquid assets
4.4. Methodology
4.4.1. GlobalData's 2018 Global Wealth Managers Survey
4.4.2. GlobalData's 2017 Global Wealth Managers Survey
4.4.3. Level of agreement calculation
4.4.4. Forecast demand/asset allocation calculation
4.5. Secondary sources
4.6. Further reading

List of Tables
Table 1: Singapore: changes to Additional Buyer's Stamp Duty
Table 2: HNW investment drivers by country: equities, 2018
Table 3: HNW investment drivers by country: cash and near-cash investments, 2018
Table 4: HNW investment drivers by country: bond investments, 2018
Table 5: HNW investment drivers by country: property investments, 2018
Table 6: HNW investment drivers by country: alternative investments, 2018
Table 7: HNW investment drivers by country: property investments, 2018

List of Figures
Figure 1: 2018 was a weak year for financial markets
Figure 2: The average HNW portfolio is increasingly exposed to equity risk
Figure 3: The IMF's Global House Price Index has reached pre-crisis levels
Figure 4: Actively managed ETFs/ETPs have been rapidly rising in popularity
Figure 5: Equity funds dominate the global HNW equity portfolio
Figure 6: Following a shift out of corporate debt, the global HNW bond portfolio is well diversified
Figure 7: Local currency products are the most common type of cash investment
Figure 8: An increasing proportion of HNW wealth is locked up in property
Figure 9: Hedge funds dominate the HNW alternative investment portfolio, but demand for ETFs is rising
Figure 10: Funds form the largest component of HNW investors' commodity investments
Figure 11: Regional variation is pronounced, with equity, property, and deposits standing out
Figure 12: Diversification benefits form the basis of investors' asset allocation decisions
Figure 13: HNW demand for alternatives is forecast to rise the most over the next 12 months
Figure 14: The traditional stock-bond correlation diminished in 2018
Figure 15: Building trust is paramount to encourage uptake of alternatives
Figure 16: Concerns regarding a financial market downturn are relatively low among wealth managers
Figure 17: Investors give little consideration to geographic diversification
Figure 18: Cash will rise in most markets as the global economic expansion is increasingly questioned
Figure 19: The expectation of rising rates for cash and near-cash investments is becoming more important
Figure 20: The predictability of returns is driving demand for property and equities
Figure 21: Rental income is of particular importance in Europe and North America
Filed in: Banking & Finance, Wealth Management
Publisher : GlobalData