Affluent Investors Poised to Put Over Half Their Cash to Work, HSBC Investor Snapshot Finds

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HSBC’s new Affluent Investor Snapshot 2024 reveals that affluent investors globally allocate nearly one-third (32 per cent) of their portfolios to cash. However, those planning to rebalance their portfolios within the next year say they will invest 54 per cent of this cash, on average.

This trend is especially notable among Gen Z and Millennials, who plan to invest 61 per cent and 56 per cent of their cash, respectively. Investors in mainland China, the United Kingdom, and the United States will also deploy more of their cash compared to other markets. Meanwhile, investors in Southeast Asia exhibit some of the lowest average cash allocations, with affluent individuals in Indonesia, Malaysia and Singapore holding just 24 per cent, 27 per cent and 27 per cent, respectively.

Portfolio Diversification on the Rise

Beyond cash and cash equivalents, public equities (15 per cent) and fixed income (14 per cent) represent the two largest individual asset classes by average portfolio allocation.

However, affluent investors are planning to diversify their portfolios further across asset classes, investment instruments, and geographies, with individuals in Asia spearheading this trend over the next three years. In particular, investors in India stand out for having the highest level of diversification globally, a highly active approach to investing, and being the most likely to reassess their portfolios.

Despite affluent investors across the world demonstrating ‘home bias’ in their investments – as reflected in their equity exposure – over one-third say they intend to increase their investments in international markets, with the United States and mainland China ranking as the top two destinations. But almost half of all investors say ongoing uncertainty around market conditions and the complexity of maintaining a portfolio present hurdles to diversifying further.

Lavanya Chari, Global Head of Investments and Wealth Solutions, HSBC Global Private Banking and Wealth, said, “It’s clear from this data that affluent investors increasingly recognise the importance of time in the market and not timing the market, as well as diversifying to build more resilient portfolios. As investors put their cash to work, they will look for actionable views and solutions that directly address their needs. This is where our expertise can make a significant difference.

Younger Generations are Embracing Investing

The findings underscore differences in how Gen Z and Millennials approach their investments relative to older generations, with the former beginning their investment journey earlier and dedicating a higher proportion of their income (27 per cent) towards investing versus Baby Boomers (22 per cent).

HSBC’s Affluent Investor Snapshot also highlights a growing awareness and intent to own alternative investments as part of a well-diversified portfolio among Gen Z and Millennials. In particular, these younger generations exhibit a strong interest in adding private market funds and hedge funds to their portfolios over the next three years.

”The fact that young investors are looking more closely at alternative assets serves as another tailwind for the asset class, as product and platform innovations improve accessibility for a wider range of investors, especially to private markets,” Chari continued.

The Affluent Investor Snapshot 2024 is a Global Quality of Life special report by HSBC. Its insights are based on data gathered from 11,230 individual investors across 11 markets. Click here to read the full report.

As at the end of 1Q 2024, HSBC’s wealth balances totaled USD1.8 trillion, up 10 per cent year-on-year. HSBC attracted net new invested assets of USD27 billion in the first three months of 2024, including USD19 billion booked in Asia.

About the Affluent Investor Snapshot

The Affluent Investor Snapshot 2024, a Global Quality of Life special report by HSBC, delves into the investment portfolios, behaviours, and priorities of affluent individuals worldwide. Conducted in March 2024 through an online survey across 11 markets, this research captures insights from 11,230 affluent investors aged 25 to 69, each possessing investable assets ranging from USD 100,000 to USD 2 million.

HSBC launched the inaugural edition of the Quality of Life Report in 2023 to explore the concept of a good Quality of Life across different generations of affluent individuals and investigate the relationship between physical and mental wellness, and financial fitness. The research sheds light on life objectives, the role of financial planning and preparedness, and the evolving nature of retirement. The forthcoming Quality of Life Report 2024 continues to expand upon these themes into several new areas, including investment attitude, wealth management behaviour, portfolio diversification, international education needs and legacy planning. The study was conducted by Intuit Research.

The Hongkong and Shanghai Banking Corporation Limited

The Hongkong and Shanghai Banking Corporation Limited is the founding member of the HSBC Group. HSBC serves customers worldwide from offices in 62 countries and territories. With assets of US$3,001bn at 31 March 2024, HSBC is one of the world’s largest banking and financial services organisations.

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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