A new report suggests the wealthiest investors in the Asia-Pacific region are seeking to reduce risk, and diversify their portfolios with direct investments including real estate and venture capital.
According to the UBS/Campden Wealth Asia-Pacific annual report, which surveyed over 25 family offices (the firms which manage the investment affairs of wealthy families) property now accounts for 16% of Asian portfolios; compared with just 9% last year.
Whilst Asian clients have always held a strong regard for real estate investments, the focus has generally been within Asia’s borders.
Now, they are beginning to look as far afield as London and New York.
In addition, allocations to direct private equity and venture capital currently represent 15% of total the portfolios; up from 4% last year.
The report also found Asian investors are diversifying away from the stock markets; with asset allocation in this sector falling from 14% of total assets in 2013, compared with 21% last year.
Much of the wealth in Asia has been generated via business owners and entrepreneurs, rather than the markets, making it unsurprising that Asia’s wealthy families are choosing to support other businesses or startups rather than stocks and shares.
Richard Straus, head of Citi Private Bank’s Asia division, expects this trend to continue as wealthy Asian families become increasingly confident toward direct investments – where individuals purchase the controlling interest in a foreign business without the buying shares.
Asian family offices have tended to use relatively high cash positions to invest in a wide range of businesses, often favouring those located within Asia’s borders.
Yet Amy Lo, who leads the Asia-Pacific practice at UBS Wealth Management, said she anticipates the current public market volatility has prompted families to diversify their portfolios away from home.
Many other experts are also noting that some investors are choosing to look further afield – in sectors such as food and beverage, technology, energy and healthcare,
This comes at a time where increasing amounts of foreign offerings seek Asian investors; such as in the Canadian energy sector, and the Russian property market.
In separate findings from the World Gold Council quarterly report, as European and America investors have exited their gold positions at record levels this year, Asian consumers have been seen to be flocking to the metal – absorbing the cheap tonnage flowing east.