This week in asset owner history: HNWIs dangerously overconfident

While structured products and equity funds used to be the asset classes of choice for high-net-worth individuals in Asia, the winds have changed as they now look towards alternatives.
This week in asset owner history: HNWIs dangerously overconfident

A lot can happen in eight years, even more so when it has to do with a fast growing group of people: the high-net-worth individuals (HNWIs) in Asia.

In 2014, a Julius Baer study found that Chinese HNWIs were dangerously overconfident about meeting unrealistic investment goals.

The private bank attributed such confidence to lack of investment experience and their entrepreneur background, which is often associated with optimism and risk-taking.

Interestingly, the report found that the HNWIs had an aggressive risk appetite. They listed their favoured investments as structured products (87%), equity funds (63%) and real estate (60%), while private equity (17%) foreign stocks (15%), commodities (7%) and futures (4%) were least popular.

Fast forward eight years and Asia Pacific HNWIs have grown in sophistication and understanding of investment products.

A volatile stock market and uncertain outlook have also driven them to look towards alternatives. According to a study by Lombard Odier, APAC HNWIs have increased their private equity and other alternative assets by 37% over the past two years.

HNWIs in Singapore and Australia are leading the trend. Sixty percent of Singapore HNWIs and 57% of Australia HNWIs intend to increase their allocation, likely because of access to those opportunities compared with other markets such as Thailand, Indonesia and the Philippines. 

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