Recent trends show that the world's wealthiest investors are moving away from traditional stocks and bonds towards alternative investments, with a notable 40% increase in private wealth alternative assets in Asia-Pacific over the past year, according to JPMorgan Asset Management.
Dan Watkins, the firm's regional CEO, highlighted the growing demand for alternative exposure among ultra-high-net-worth clients. This shift is largely due to concentrated equity markets, geopolitical uncertainties, and concerns that traditional assets may not provide adequate protection against downturns.
John Woods, chief investment officer for Asia at Lombard Odier, noted that alternative investments now make up 60% of single-family office portfolios, surpassing traditional assets for the first time. Wealthy investors are seeking diversification and income, particularly in light of high valuations and the correlation between stocks and bonds.
Hedge funds are particularly appealing as they offer returns less reliant on equity market performance, while private credit is attracting interest for its contractual income streams. Infrastructure investments are also gaining traction, especially those related to the AI boom, with net inflows into infrastructure funds rising 30% year-on-year.
However, investing in alternatives carries risks, including potential capital lock-up and valuation delays. Despite these risks, the trend indicates a growing appetite for alternative assets among wealthy investors, funded largely by new capital rather than divestments from traditional markets