The 2024 World Wealth Report provides an in-depth analysis of the total asset allocation of HNWIs and how it evolved from January 2023 to January 2024.
A new report from the Capgemini Research Institute details the investment trends of the world’s high-net-worth individuals (HNWI) and how these changed over the last year. High-net-worth individuals are defined as those with at least $1 million in wealth.
Asset Allocation Shifts
At the beginning of 2023, HNWIs allocated their assets as follows:
• 34% in cash and cash equivalents (savings deposits and money-market funds)
• 23% in equities
• 15% in fixed income (bonds and fixed annuities)
• 15% in real estate
• 13% in alternative investments (commodities, currencies, private equity, hedge funds, structured products, and digital assets)
By January 2024, the allocation shifted to:
• 25% in cash
• 21% in equities
• 20% in fixed income
• 19% in real estate
• 15% in alternative assets
Strategic Shifts Towards Growth
Elias Ghanem, global head of Capgemini Research Institute, attributes the reduction in cash allocation to a shift towards growth-focused investment strategies. He notes that the previous year’s uncertainty led many HNWIs to prioritize wealth preservation by holding cash. However, this year has seen a decline in cash holdings as individuals move towards growth-oriented investments.
“Everyone focused on wealth preservation last year due to the confusion in the markets,” Ghanem told Yahoo. “This year, we see a shift with cash and cash equivalents dropping back to 25% as people move towards wealth growth.”
The decrease in cash holdings aligns with historical data, indicating a return to typical asset allocation patterns.
Focus on Fixed Income and Tax Optimization The report highlights that HNWIs, particularly those with $10 million and above, prioritize fixed-income instruments and tax optimization. Greg Gatesman, head of international client development at UBS, emphasizes the use of bond ladders and specialized tax advice to enhance wealth management strategies.
Growth in Alternative Investments
Alternative investments have also seen an upward trend. Pierre Ramadier, CEO of BNP Paribas Wealth Management International Markets, suggests that despite expectations of moderate growth in 2024, bonds and private credit will remain attractive for preserving wealth. Private equity investments are likely to be more appealing than volatile equity markets for wealth growth.
Survey Insights
The report, based on a survey conducted in January 2024, includes insights from 3,119 HNWIs with backgrounds in wealth management, banking, brokerage, and other financial sectors across North America, Asia, and Europe.
These findings provide valuable insights into the shifting investment strategies of high-net-worth individuals and underscore the ongoing evolution of asset allocation in response to market conditions and economic outlooks.
