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Direct vs Fund Investments: HNW Preferences

Published By :

Verdict Financial

Published Date : May 2016

Category :

Banking

No. of Pages : 38 Pages

Globally, 44% of HNW wealth is held via funds as opposed to directly. However, there are significant regional differences when it comes to investment preferences. For example, HNW investors in the US, and to a lesser extent in Western Europe, are significantly more likely to invest in funds than their peers in Central and Eastern Europe, Asia Pacific, and the Middle East. Furthermore, while equity funds prevail across the globe, they are particularly prominent in the West. There are also strong differences across asset classes when it comes to the drivers to invest in funds. While asset diversification benefits feature strongly across all asset classes, lack of time to research direct equity investments is a key driver for fund holdings in the equity space, while an expectation of better returns motivates HNW investors to opt for alternative investment funds as opposed to direct holdings.

Key Findings

  • Diversification benefits are the number one driver why HNW investors opt for funds as opposed to direct holdings, and in light of ongoing market turbulences, wealth managers would do well to  provide a strong range of funds that  offer not only exposure to different industries, but also geographies and asset classes.
  • No longer the reserve of institutional or mass affluent investors, exchange-traded funds (ETFs) form an increasingly large part of HNW investors’ portfolios, and being able to offer a wide range of such funds next to more sophisticated products is becoming more and more important.
  • A large chunk of HNW wealth is locked up in direct property; wealth managers would do well to convince their clients of the benefits of property funds so as to increase their fee income.
  • While HNW investors tend to be well-diversified across asset classes and geographies, industry diversification is equally important – something wealth managers should discuss with their clients.

Synopsis

This report draws on our 2015 Global Wealth Managers Survey to analyze HNW investment preferences across the globe. It breaks down HNW investors’ fund portfolio by asset class and type of investment and contrasts fund holdings to direct holdings. It furthermore provides insight into why investors opt for funds as opposed to direct holdings.

Specifically the report:

  • Examines what proportion of HNW wealth is kept in funds as opposed to direct holdings, and how preferences differ across the globe.
  • Provides an understanding of when and why HNW investors prefer fund investments and when they prefer direct holdings.
  • Identifies the different drivers that determine HNW investment preferences in the fund space. 
  • Analyzes how fund holding preferences differ across asset classes. 
  • Examines data in more detail through an online interactive dashboard that enables you to select and view the data of your choosing.

Reasons To Buy

  • Understand how to best promote funds to your HNW clients.
  • Review your service offering, and adjust it based on a detailed understanding of HNW investors’ investment preferences.
  • Give  your marketing strategies an edge and capture new clients using insights from our data on HNW drivers for investing in funds  vs direct holdings.

Table of Contents

Allocation Preferences
HNW Fund Drivers

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