HNW Asset Allocation Trends

HNW Asset Allocation Trends

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Executive Summary

There is no single driver influencing HNW investment preferences. On the contrary, investment choices are determined by an interplay of factors such as risk preference, economic forces, and investor attitudes. As we enter 2016 we expect a reallocation of assets, benefiting alternative investment holdings globally. At the same time, HNW investors are looking for cheap buying opportunities in the equity space.

Key Findings

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 Financials 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.

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Ankur Gupta, Head Marketing & Communications



HNW investment preferences are shaped by a multitude of factors

Key findings

Critical success factors


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


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

Supplementary data



Liquid assets


Verdict Financials 2015 Global Wealth Managers Survey

Verdict Financials 2014 Global Wealth Managers Survey

Verdict Financials 2013 Global Wealth Managers Survey


Further reading

About Verdict Financial


Figure 1: Alternative investments have become increasingly popular

Figure 2: 2015 was a rough year for commodities

Figure 3: ETPs are becoming increasingly popular among HNW investors

Figure 4: Bond funds form the largest component of HNW investors fixed income investments

Figure 5: Local currency products are the most common type of cash investment

Figure 6: A significant proportion of HNW wealth is locked up in property

Figure 7: Hedge funds dominate in HNW investors alternatives portfolios

Figure 8: ETPs form the largest component of HNW investors commodity investments

Figure 9: Global markets have been subject to significant volatility

Figure 10: Investors attitude towards risk differs significantly across the globe

Figure 11: The majority of wealth managers expect HNW equity demand to rise

Figure 12: Capital appreciation opportunities are motivating HNW investors to channel their wealth into equities

Figure 13: Global demand for bond holdings will be varied

Figure 14: Risk aversion is driving bond investments in the HNW space

Figure 15: Direct bond holdings dominate in emerging markets

Figure 16: Global HNW cash holdings will increase over the next 12 months

Figure 17: Risk aversion is the top driver for cash investments

Figure 18: Rising consumer confidence will result in deposit holdings declining in the Europe

Figure 19: HNW property investments are largely forecast to rise over the next 12 months

Figure 20: Rental yields constitute the number one driver of real estate investments

Figure 21: HNW demand for alternatives in Australia is forecast to skyrocket

Figure 22: Capital appreciation is the number one driver of alternative investments

Figure 23: Commodity holdings are set to increase in the HNW space

Figure 24: The benefits of asset diversification are driving commodity investments

Figure 25: Amid global uncertainty, the price for precious metals skyrocketed in 2016

Table 1: 10-year government bond rates

Table 2: Real house price growth, annual percentage change (selected countries)

Table 3: Equity index movements and gross rental yields in Europe

Table 4: Real house price growth, annual percentage change (selected countries)

Table 5: HNW investment drivers by country: equities, 2015

Table 6: HNW investment drivers by country: bonds, 2015

Table 7: HNW investment drivers by country: cash and near-cash products, 2015

Table 8: HNW investment drivers by country: property, 2015

Table 9: HNW investment drivers by country: alternatives, 2015

Table 10: HNW investment drivers by country: commodities, 2015

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