Wealth managers are having to rethink asset allocation strategies for their clients as private markets become increasingly important and as the onslaught of tariffs puts more impetus on the need for a diversified portfolio, according to speakers at the Global Private Banker Summit.
Speaking in a panel focused on public versus private markets, Hussain Selani, Head of Investments India and Global Indians at Barclays, said while it’s important to have both public and private market assets in the portfolio, the challenge is on how to include private market allocation to the strategic allocation given the broad lack of transparency and data in the industry.
The risk appetite and liquidity of a client also need to be considered when building their portfolio, he added.
Speaking in Singapore on 4 June, the panellists broadly agreed that the traditional 60:40 investment portfolio model needs to be rethought as it no longer provides the necessary diversification that high and ultra-high net worth clients seek.
James Cheo, Chief Investment Officer, Southeast Asia at HSBC Private Banking and Wealth Management, said investors should think about carving out a bit of their portfolio into private equity to “take advantage of the opportunities in the private market”, and to venture beyond investment grade public bonds to also include high yield bonds, private credit and infrastructure deals and gold.
But that diversification should come with some understanding of the relatively higher risks in the private markets.
Eddy Loh, Chief Investment Officer at Maybank Group Wealth Management said at the panel: “You need to understand what you’re investing in. As wealth managers, it’s our duty to make sure our clients understand what they are getting in, not just the upsides but also on the downside.”
Among the alternative investments in focus, the panellists pointed to gold as an asset class that could do well in an environment of high inflation and high geopolitical uncertainty.
Additionally, some of them see mid- to long-term opportunities in renminbi assets.
Stephen Ng, Head of Southeast Asia and South Asia, CEO of Singapore, CICC, said finance ministries in the region are becoming more open to issuing renminbi bonds, mainly because of the low cost of funding in the currency. It’s also a natural choice for countries that are seeing growing investments from Chinese developers into their domestic infrastructure projects, said Ng.
“The government is taking the lead in having more renminbi floating offshore,” he added. “We are seeing more renminbi products becoming available in the region to investors, and hopefully we will see the adoption rate increasing in the long term.”
Given the growing focus on de-dollarisation amid US tariffs, the panellists pointed out that there is more interest among investors in European markets, but the region’s capital markets need to be more vibrant to really capitalise on that interest.
The Singapore dollar is also a natural – and stable – choice for wealth investors looking to trim their US dollar exposures, but investment options in the Asian currency remain limited.
When it comes to markets, China and India both hold plenty of potential.
Recent reforms from China – including the government’s offer of fresh support to the technology sector and entrepreneurs – could be a turning point to drive more investments into the country.
Meanwhile, India’s status as a solid service provider with a stable government, its demographic dividends and strong infrastructure have driven foreign investments into the South Asian nation.
Loh added: “It’s not a question of either China or India but it’s both. If both these economies with the largest populations in the world can do well, that bodes well for Asia as a whole, including ASEAN countries.”
