2019-10-01 Singapore Tatler

Basedoninformationfromvariousbanks,

wealthmanagersandothersources,including

Bank ofAmericaMerrillLynch,Capgemini and

IPIWealthManagement

WHERE THE

WEALTHY

PUTTHEIR

MONEY

35 %

EQUITIES

19.7%

FIXED

INCOME

17.7%

ALTERNATIVE

ASSETS 17.4%

CASH

10.1%

REAL

ESTATE

totalglobalwealthofthisgroupofpeopleis nowaround
US$31.5trillion.
Aninformalsurveyofwealthmanagerssuggests
thattheultra-wealthyroughlysplittheirinvestments
betweenequities(35percent),fixedincome(20percent),
alternativeassets(18percent),cash(17percent),andreal
estate(10percent).
Thesplitbetweendifferentassetclassesdoesnot
typicallychangemuchfromoneyeartothenext,
butthatis shiftingasthesophisticated
platformsatprivatebanksareproviding
wealthyinvestorswithaccessto
moresystematicinvesting,such
asquantitativestrategiesthat
makeuseofbigdata.
“Thishasbecomea very
popularstrategyasthe
allocationoftheportfolio
is dynamicallyadjusted
totheeconomicand
marketcyclebasedona
proprietaryindicator,”
saysZuercher.
Thefollowing
arethemainasset
classesthatmake
uptheportfoliosof
theultra-wealthytoday.

ALTERNATIVEASSETS
Thisis oneareathatsets
ultra-wealthyportfoliosapartfrom
thoseofregularinvestors.Access
toprivateequity,venturecapital,
hedgefunds,infrastructureandother
alternativeopportunitiesis typically
restrictedtosophisticatedinvestors
withdeeppockets—andcanoffer
significantlyhigherreturnsthanconventionalinvestments,
atleastintheory.Thericheryouare,thebiggeryour
allocationto these exclusive types of investments.

CASH
Largecashpilesareanotherhallmarkoftheultra-wealthy.
Onthefaceofit,cashis a terribleinvestment—itearns
closetozerointerestthesedays—butit is notuncommon
forwealthyinvestorstohaveasmuchasa quarteroftheir
portfolioincash(orcash-likeinstruments).Oneadvantage
ofkeepinga largeamountofcashtoonesideis theability
toexploitopportunitieswhentheyarise.Theclassic
exampleis thecrashinpropertypricesduringSars,when
thosewithcashonhandmadeoutlikebandits.Whileit’s
truethatstockscanbesoldquicklyandeasilyforcash,
theSarsexampleis instructive—becausestockpricesalso
crashedatthesame time, meaning that selling would have
entailed losses.

REALESTATE

Sometimesclassedasanalternativeinvestment,butacross

Asia,propertyis a stapleofeveryone’sinvestments.Indeed,

realestateis typicallythemajorsourceofwealthforAsia’s

rich,andtheirinvestmentsarefocusedondiversifying

awayfromthesector.Butforthosewhoarenotreal-estate

billionaires,investinginpropertyaroundtheworldis an

increasinglypopularstrategy,eitherthroughinstruments

such asrealestateinvestmenttrustsorbespoke

schemesarrangedby private banks for

theirclients.

EQUITIES

Theamountofmoneyinvested

instockmarketshasbeen

risingintandemwiththe

growthofwealthinAsia,

driveninpartbythebigger

riskappetiteofwealthy

peopleinthisregion,but

alsobythehistorically

lowinterestratesthat

havepersistedformore

thana decadenow.But

2018 sawa dramatic

reversalfromthehighs

of2017,withSingapore’s

StraitsTimesIndexindex

down9.8percentfortheyear.

Globally,thetech-drivenNasdaq

indexwasdown8.6percentin

2018 andthewiderS&P 500 was

down8.6percentonthe year.

FIXEDINCOME

Oncethebulkoftraditionalportfolios,

fixedincomeinvestmentssuchasbonds

havegivenwaytohigher-yieldingasset

classessuchas,well,everythingelselistedherebesides

cash.Theultra-lowinterestratesthatresultedfromthe

2007 financialcrisis,whichwerea resultofcentralbank

policiesdesignedtopreventdeflation,havehelpedtoprop

upstockprices but have driven down the yields on bonds.

OTHERS

Onenewareathathasgainedattentionduringthepastfew

yearsis cryptocurrencies.AccordingtoFrenchconsulting

firmCapgemini, 29 percentofHNWIs—individualswith

assetsofUS$1mandmoreavailableforinvestment—

globallysaytheyhada highdegreeofinterestinbuyingor

holdingcryptocurrencies.“Despitethegrowingfervour,

wealthmanagementfirmshavetodatebeenambivalent

aboutofferingguidance,withonly34.6percentof

HNWIsgloballysayingtheyhadreceivedcryptocurrency

informationfromtheir wealth managers,” says the latest

Capgemini report.

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