Alternative investments have become most sought-after by high net worth investors (HNWIs) in Asia, with 70.9% of asset managers surveyed saying it is the most in-demand asset class in the region, according to a report published by Boston-based research firm Cerulli Associates.
Following alternative investments are multi-asset (67.3%) and income-generating strategies (60%).
The demand for alternatives is highest in Hong Kong and Singapore, with 91% and 86% of managers naming these as their clients’ top investments, respectively, according to the report. It added that the demand for alternatives is also evident among family offices, with multi-family offices generally showing greater demand for strategies such as hedge funds and private equity.
“Managers Cerulli spoke to expect the use of alternatives to increase due to volatility in public markets and prevailing low yields on bonds,” the report said.
Third-party platforms providing alternative strategies are also gaining traction. For example, Singapore-based fintech firm Xen has gathered at least $100m in assets since its launch last year and plans to reach its $1bn target by the end of 2020, according to the report. The platform targets small family offices, external asset managers and small onshore banks that may struggle to gain access to alternative investment opportunities.
Meanwhile, multi-asset allocation strategies are also becoming increasingly relevant against the backdrop of uncertainty in the economic climate caused by the Covid-19 pandemic, Cerulli said. In China, managers see the strongest interest in multi-asset strategies, while in Taiwan, managers note the highest demand for global fixed income strategies among HNWIs.
Thematic demand
Separately, Asia’s HNWI has a positive outlook on thematic products.
“Managers Cerulli spoke to have noted demand for healthcare and technology funds. Both sectors might be on managers’ and investors’ radars during the current global pandemic,” it said.
Thematic products had strong inflows during the first quarter in Asia. In Hong Kong, net inflows toward sector funds, including technology and healthcare products, doubled to $483m in March from the combined flows in January and February, according to data from the Hong Kong Investment Funds Association. In Malaysia, while equity funds were largely avoided, investors poured money into technology products during the first quarter, according to data from Morningstar.
Interest is also building in ESG strategies, according to the Cerulli report, noting that UBS Wealth Management is planning to launch UBS Advise SI in Asia by the middle of the year. UBS Advise SI is a flat fee advisory mandate that focuses on ESG investments.
The planned launch of UBS Advise SI follows after UBS Wealth rolled out a discretionary sustainable portfolio in Asia two years ago, which has since attracted at least $1bn in investment from the region.
