Affluent Investors Double Allocations to Alternative Investments, HSBC Investor Snapshot Finds
- Allocations to gold and alternative investments see 120% and 100% year over year increases, respectively.
- Half of affluent investors plan to own alternatives within the next 12 months – double the current ownership level.
- Global affluent investors have put their cash to work, reducing cash allocations by 40% in the past year.
Around half of the global affluent investors in the survey of 10,797 individuals in 12 markets say they plan to own alternative investments within the next 12 months, doubling the current ownership level. Multi-asset solutions, private market funds, mutual funds and hedge funds are the most popular investment products as investors seek broader diversification. Private market funds are particularly popular, with 29% of investors planning to add them to their portfolios, while 20% intend to invest in hedge funds.
Affluent investors globally have cut cash levels by nearly 40% over the past year, with younger generations driving the most significant reductions; Gen Z and millennials have cut their cash holdings from 31% to 17%. Younger generations are also leading the adoption of alternative investments, tripling their allocation to alternative investments within the past 12 months.
“As technology evolves and information becomes more readily available, investors report that social media platforms and banks remain their top information channels,” said HSBC
Gold Shines as Safe Haven
Alongside alternatives, gold has emerged as the standout asset class of the year, with allocations more than doubling from 5% to 11% of portfolios. This marks the largest portfolio allocation increase across other asset classes compared to last year.
Similar to alternatives, the number of portfolios that include gold looks set to double over the next year, as one in every two affluent investors plan to invest in the asset. While physical gold remains a key safe haven amid macroeconomic uncertainty, with over 40% planning to own the asset within the next 12 months, digital gold has also been gaining traction, with 28% of investors expressing interest.
Priorities Shift to Focus on Personal Wellbeing
The survey also revealed a global shift in mindset, with investors prioritising vacation and leisure as the number one financial goal worldwide.
Despite this shift, gaining wealth for financial security remains a priority across generations. Gen Z continue to focus on diversification when considering income, as well as their investment portfolio; their second biggest priority is creating additional, or multiple, revenue streams.
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