COVID-19: How Asset Allocation Impacts Investment Deals of the Ultra-Rich

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COVID-19 How Asset Allocation Impacts Investment Deals of the Ultra-Rich
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The current coronavirus pandemic is taking a massive toll on both the public health as well as the economy of the world. Its impact has been so severe and totally unprecedented that individuals and nations alike are being affected by it – even the world’s ultra-rich.

Presently, only a handful of economic sectors are experiencing slight increases in demand. Others, including businesses owned and managed by wealthy individuals, are merely trying to stay afloat in an ocean of negative outcomes brought about by the pandemic. Besides concerns about the health and wellbeing of loved ones, most wealthy people are currently grappling with the devastating effect of the pandemic on their wealth.

And while developed countries have sufficient resources to keep their citizens and economies going in this period, developing countries may not be able to do the same.

Given that stock markets around the globe are barely trying to survive the negative impact of the pandemic, most wealthy individuals will also experience a significant reduction in their wealth. As a matter of fact, even the Ultra High Net Worth (UHNW) segment had been affected by this pandemic.

Presently, only a handful of economic sectors are experiencing slight increases in demand. Others, including businesses owned and managed by wealthy individuals, are merely trying to stay afloat in an ocean of negative outcomes brought about by the pandemic.

However, the level of impact the pandemic will have on the wealth of UHNW individuals depends mainly on their asset allocations. For individuals with liquidated assets, they are more likely to experience depreciation in value – against the U.S dollar – for their assets. The only lucky ones would likely be those with liquid asset reserves in the U.S dollar.

Furthermore, the response of governments and health sectors to the pandemic will also determine how wealth is affected by this period. And when the worst is over, the recovery rate of economies will equally determine – to a large extent – the overall impact of the pandemic on wealth.

Ever since the COVID-19 induced lockdown and social distancing practices, digitalization has experienced an exponential increase in engagement. Virtually every organization and business have resorted to online platforms for their day-to-day interactions. People have retreated to online messaging and video calls to keep in touch, and educational institutions have upped their games in their respective online engagement platforms.

And with an uncountable number of people now working remotely, organizations have beefed up their connectivity and online security measures. Bloomberg further notes that it is becoming somewhat evident that remote working would remain as an aftermath of the coronavirus pandemic.

Following this spike in the use and patronage of technology, investors are currently observing an increase in the interest of UHNW individuals in technology. Private tech companies are gradually also becoming the target of long-term investment deals by UHNW individuals.

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

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