Discover how high net worth investors are expanding their portfolios with alternative investments to enhance growth and diversification.
Introduction
In today’s dynamic financial landscape, high net worth (HNW) investors are progressively shifting their focus towards alternative investments. This strategic move aims to achieve greater portfolio diversification and unlock new growth opportunities. As traditional investment avenues like public equities and fixed-income securities face volatility, alternative assets offer a compelling alternative for those seeking to optimize their wealth.
The Growing Trend of Alternative Investments Among HNW Investors
According to The Cerulli Report—U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2022: Shifts in Alternative Allocations, the allocation of assets to alternative investments among HNW individuals has risen from 7.7% in 2020 to an average of 9.1% in recent years. This trend is expected to continue, with projections indicating an increase to 9.6% by 2024.
Key Drivers Behind the Shift
- Portfolio Diversification (50%): HNW investors are increasingly seeking to reduce portfolio volatility by incorporating non-traditional asset classes.
- New Growth Opportunities (50%): The quest for higher returns is driving interest in private capital, real estate, technology, and other alternative sectors.
“Advisors—disappointed in public equity and fixed-income returns—are allocating more to private capital exposures,” says Chayce Horton, research analyst. “By expanding opportunities into private asset and credit markets, affluent and HNW investors are better equipped to properly diversify their portfolios.”
Preferred Alternative Investment Strategies
HNW practices are notably increasing their engagement in various alternative strategies:
- Private Equity (50%)
- Private Real Estate (45%)
- Direct Investments/Co-Investing (32%)
A remarkable 94% or more of surveyed HNW practices anticipate maintaining or growing their positions in these alternative investment opportunities, excluding hedge funds.
Enhancing Service Offerings
Beyond asset allocation, HNW advisory firms are expanding their service offerings to include:
- Alternative Manager Search and Selection: Growing from 50% in 2016 to 67% in 2022.
- Comprehensive Alternative Investment Consulting: Providing tailored solutions to attract and retain HNW clients.
Cerulli predicts that this trend will persist as private markets mature, emphasizing the importance of integrating alternative investment services into core advisory offerings.
The Role of Platforms Like Oriel IPO
In the United Kingdom, Oriel IPO (Oriel Services Limited) is revolutionizing the investment landscape by bridging the gap between startups and investors through its innovative online marketplace. Launched in early 2024, Oriel IPO specializes in SEIS/EIS tax-advantaged investments, making it easier for HNW investors to diversify into alternative assets such as real estate, media, communications, education, and technology.
Key Features of Oriel IPO
- Commission-Free Funding: Eliminates traditional fees, enhancing the investment experience.
- Curated Investment Opportunities: Focuses on high-potential UK startups seeking £200K to £500K.
- Educational Resources: Offers guides, calculators, and industry insights to empower informed decision-making.
- Subscription-Based Tiers: Provides flexible access options, including a free trial period.
Addressing Market Challenges
Oriel IPO tackles significant challenges in the UK startup ecosystem, particularly in accessing government-supported SEIS/EIS schemes. By simplifying the investment process and offering comprehensive educational tools, the platform ensures that both entrepreneurs and investors can navigate tax incentives confidently, thereby fostering a robust investment culture.
Future Outlook
As the appetite for alternative investments among HNW individuals continues to grow, platforms like Oriel IPO are well-positioned to capitalize on this momentum. Future strategies include pursuing FCA regulation, optimizing user conversion, and expanding service offerings to enhance user experience and strengthen brand presence.
Strategic Focus Areas
- Regulatory Compliance: Ensuring adherence to evolving financial regulations to build trust.
- User Conversion Optimization: Converting trial users into paying subscribers through enhanced value propositions.
- Partnerships and Branding: Collaborating with industry leaders and executing strategic marketing campaigns to educate and attract the target audience.
Conclusion
The increasing allocation of assets to alternative investments by high net worth investors underscores a broader shift towards more diversified and growth-oriented portfolios. By leveraging innovative platforms like Oriel IPO, HNW individuals can seamlessly access curated, tax-efficient investment opportunities that align with their financial goals and risk appetites.
Ready to diversify your investment portfolio with alternative assets? Explore Oriel IPO today!
