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For years, wealth managers and private banks have been regaled with the case for loading up on “alternatives” – a term ranging from private equity to hedge funds.
HNW clients of UBS want to
buy more alternative assets and spread risks amid volatile
markets, Iqbal Khan (main picture), the Swiss bank’s Asia-Pacific
chief has said.
“We see continued demand” for alternatives, Khan told
Bloomberg in Hong Kong at the UBS Asian Investment
Conference yesterday.
For years, private banks and wealth managers have talked about a
need to expand client access to alternative investments, a term
spanning private equity, private credit, infrastructure,
commodities, real estate, and hedge funds. (There is debate about
whether hedge funds are really “alternative assets” or different
ways to play in certain markets.) Large firms in the private
markets area, such as Carlyle, Blackstone and KKR, have built out
private wealth arms, as they see HNW and UHNW individuals,
including family offices, as important sources of growth.
A report in 2023 from consulting firm Bain & Co found that
ultra-HNW investors and family offices with more than $30 million
in assets already have 22 per cent invested in alternatives.
Those with $5 million to $30 million in assets allocate 3 per
cent to alternatives on average; for those with $1 million to $5
million, it is just 0.7 per cent.
“We’ve definitely seen a significant growth of alternatives and
alternatives investments in client portfolios,” Khan is quoted as
saying. “It is still at a lower percentage when you think about
an aggregated perspective of wealth portfolios. So, there is
probably some way to go in terms of diversification into
alts.”
Khan, who
relocated to Hong Kong last year and is also co-president for
global wealth management, reportedly said that he expects lower
interest rates and continues to see the potential for a
stagflation environment.
In late January, a
report by BNY
found that less than 3 per cent of HNW portfolios hold
alternative assets. The survey – drawn from the US –found that
during the coming next 10 years, private wealthy investors will
load up $12 trillion from $4 trillion on alternatives.
