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Asia’s wealthy embrace investment risk

More Apac investors rank themselves as “fairly aggressive” when making portfolio decisions compared with their European peers, according to a new survey.

While most of the investors surveyed as part of the Avaloq research said they take a balanced risk approach when investing, 42% in China, 34% in Hong Kong and 21% in Singapore said they are “fairly aggressive” when managing risk. In Europe, this only applied to 14% of investors, on average.

“Wealth managers in Asia must help their clients manage their risk profile appropriately and remain focused towards longer-term growth outcomes even when faced with shorter-term volatility in performance,” said Pascal Wengi, managing director for North Asia at Avaloq.

“Beyond this, wealth managers must recognise that risk tolerance also grows along with expertise and cater to an evolving suite of products for their clients’ needs at every stage of their investment lifecycle,” he added.

In the UK, as a benchmark, 54% of the investors surveyed evaluated themselves as “very conservative” or “fairly conservative”.

Risk-averse investors may be extra-sensitive to volatile market fluctuations, and may prefer hearing about how a certain financial product or advisory process can account for and soften such impacts, said Avaloq.

Understanding investment objectives

The dominant reason for investing varies from country to country. While 73% of Singaporean investors said they direct their savings towards retirement, 55% in Hong Kong put their savings towards property investments. 

In China, the percentage of investors investing for future personal healthcare costs and raising the next generations is similar, at 67% and 64%, respectively.

“It’s clear that understanding one’s motivations for investing is key for financial organisations,” said Avaloq.

“It’s one thing to engage with a client one-to-one, where an advisor can understand that particular investor’s unique motivations; it’s another thing when an organisation wants to launch an investment product offering geared towards a particular market or shape an advisory process to reflect local needs.”

Instead of hiring professionals, 75% of the Apac investors surveyed also prefer a hands-on approach to managing their wealth.

But independence does not stop Asian investors from seeking some type of advice; the survey found that investors in China, Hong Kong and Singapore are leading the world when it comes to robo-advisors.

Nevertheless, over 30% of investors in China and Hong Kong showed interest in using financial advisors in the future. 

Preferred asset classes

Further, the survey showed that publicly traded stocks, cash and investment funds are the top asset class choices for global investors.

Comparing countries, China is leading the world in conventional assets such as real estate (60%), investment funds (78%) and equities (72%).

Hong Kong investors, meanwhile, showed the highest interest among global investors in bonds (58%), cash (65%), ETFs and traditional investment funds (both 55%).

Part of the Mark Allen Group.