Global and Australian shares top investment list for wealthy Aussies
Equities and cash remain the top investment choice for wealthy Australians but they are looking for new growth opportunities as they reset their portfolios amid economic uncertainty.
Wealthy Australians favour private market investments to grow their wealth this year, as they diversify their investment portfolios amid high inflation and macroeconomic uncertainty.
Australia’s high-net-worth individuals (HNWIs) and ultra-HNWIs are resetting their portfolios with a focus on better returns and higher growth, according to LGT Crestone chief executive Michael Chisholm.
“With inflationary pressure and market turbulence top of mind, HNW and UHNW individuals are seeking opportunities for growth by way of diversification, demonstrating a strong appetite for private markets resulting in a broader spread of allocations across asset classes,” he said.
The wealth management firm’s 2023 State of Wealth report, released on Monday, showed international stocks and local equities top the asset classes being considered by wealthy Australians for the next 12 months.
“While equities and cash remain the two largest current investments, closely followed by real estate, this proportion has dropped in 2023 as HNW Australians widen their exposure to investments to include emerging markets and various private alternatives,” Mr Chisholm said.
However, Australian equities are now named as a current investment by 58 per cent of those surveyed compared with 73 per cent two years ago while international shares fell to 24 per cent this year from 32 per cent in 2021.
Their appetite for global equities is being driven by a strong desire to diversify their investment portfolios, and the potential exposure to higher growth, the report noted.
“While HNWIs remain cautiously optimistic about global investment conditions in the short term, inflation remains top of mind, driving investors to spread their allocations across a variety of asset classes to help manage risk,” Mr Chisholm said.
Almost half of the HNWIs surveyed are concerned about volatility in global markets, but do not plan to reduce their exposure to international equities, the report found.
The findings are based on a survey of more than 1000 HNWIs – investors with $1m in investable assets – and UHNWIs, who have at least $10m in investable assets.
Australian equities (58 per cent) and cash (51 per cent) remain the two biggest current investments for wealthy Australians, followed by real estate (29 per cent), international equities (24 per cent) and real estate investment trusts (23 per cent).
Mr Chisholm said the report’s findings point to investors’ interest in alternative or developing themes like emerging markets and artificial intelligence to assist in diversifying portfolios.
The report found returns continue to be a dominant driver of the wealthy investors’ decisions, with philanthropy being less of a priority.
“Wealthy individuals are eager to have their personal values – including those related to climate change and societal wellbeing – expressed in the way they are investing,” Mr Chisholm said.
“Yet in the face of uncertain economic conditions, returns are the predominant driver of choice for this type of investing.”
HNWIs viewed real estate as the best-performing asset over the past year, whereas for UHNWIs the best performer was exchange-traded funds.
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