Investment Strategy - Private Equity, cash, gold and real estate most favoured
Four in five UHNWIs to alter 2020 investing strategies amid global economic slowdown and political upheaval
- Private Equity, cash, gold and real estate most favoured investment allocations in the near term
London, UK – Four in five ultra-high-net-worth individuals (UHNWIs) intend to alter their 2020 investment strategies in response to the global economic slowdown, trade wars and political tensions, according to The Wealth Report 2020, released by Knight Frank.
In a survey of 620 wealth advisors managing approximately US$3.3 trillion on behalf of UHNWIs across the globe, respondents in every region selected the global economic slowdown as the most important issue affecting UHNWIs ability to create or preserve their wealth in 2020, and the primary reason for the shift in strategy.
“While many are sitting on their hands waiting for clarity, those with the most at stake are changing tack to protect their wealth,” says Liam Bailey, global head of research at Knight Frank. “Whether that be seeking the relative safety of gold, or the diversification across geography or industry sector offered by private equity and real estate, the world’s wealthy are actively responding to risk in a manner in which we’ve not seen since the global financial crisis.”
Trade wars and other political tensions and negative rates followed the global economic slowdown as the issues most likely to affect wealth creation or preservation during 2020.
As a result, some 47% of UHNWIs intend to increase their allocations to private equity in the near future, followed by cash (45%), gold (44%) and real estate (43%). Some 38% of money managers intend to cut allocations to equities in the near term, more than any other asset class.
UHNWI’s in the Indian subcontinent (94%), Australasia (91%) and Africa (88%), were most likely to be actively altering their investment strategies, while UHNWIs in the U.K., who have experienced a year of bruising political upheaval and uncertainty over the nation’s future relationship with the EU, were least likely to be shifting their plans, at 62%.
The Wealth Report 2020 Attitudes Survey also reveals that 80% of UHNWIs are spending more time and money on their personal wellness. This is led by the wealthy in Russia & CIS with 94% of UHNWIs investing more in this area, followed by Australasia (88%) and the Middle East (85%).
When asked whether UHNWIs were increasingly looking to invest in companies that could profit from the ‘wellness’ trend, the results pointed to a lag in adoption. On average across the globe, 44% of the wealthy are interested in investing into businesses that could benefit from the ‘wellness’ trend, when asked whether they are increasingly concerned about the attitudes of companies they invest in towards the ‘wellness’ of their employees, society and the environment, nearly half (47%) of UHNWIs said this was a concern.
“This is the very first time we have looked into the attitudes of UHNWIs investing into the ‘wellness’ sector,” Liam Bailey added. “Whilst the results show that people are committed to their own personal wellbeing, there is less commitment when it comes to investing in businesses that profit from the ‘wellness’ trend and investing in companies that prioritise the wellbeing of their employees, society and the environment.
“This disjuncture points to an opportunity for investors – with personal adoption outpacing investment activity. The ‘wellness’ sector is relatively new and it would seem fair to assume that the wealthy’s personal views with regards to ‘wellness’ will filter down and influence their professional decision-making in the future.”
Courtesy: Knight Frank
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Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 19,000 people operating from 512 offices across 60 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit knightfrank.com.