SINGAPORE – Among the well-heeled in Singapore, more than half have increased their exposure to safer assets such as cash or gold, suggesting a hesitancy towards volatile equity markets and riskier investments.
According to Swiss private bank Lombard Odier’s fourth annual report on Asia-Pacific high-net-worth individuals (HNWI), 56 per cent of respondents in Singapore have increased their diversification over the past two years in the light of global headwinds, with about 53 per cent turning to safer assets compared with 41 per cent in the region.
Mr Francis Liu, chief executive officer of private clients in Asia at Lombard Odier, said this might not represent a “wholesale flight to safety” but, rather, a hesitancy towards riskier investments such as digital assets and the more volatile listed equities.
He noted that the HNWIs, or rich individuals with at least US$1 million (S$1.36 million) of investable assets, understand the need for diversifying their portfolio, but this is not well implemented. Investable assets are financial products that can be easily liquidated such as cash, stocks and bonds.
The study surveyed more than 460 HNWIs in Singapore, Hong Kong, Japan, Thailand, the Philippines, Taiwan and Australia on their personal and wealth goals within the family setting.
The personal goals touched on included lifestyle, protecting family wealth, investments, launching one’s own business, sustainable investing and philanthropic projects.
When it comes to personal goals, the majority of the well-heeled in Singapore believe that enjoying and maintaining their current lifestyle is essential.
However, only about 15 per cent of Singapore respondents believe starting their own business to be an essential goal, the lowest in the region.
About 30 per cent of Singapore HNWIs feel that investing for a sustainable future is essential. However, while they care about issues such as climate change and food security, many have not taken any investment action as they are unconvinced about the returns.
Another area where the rich in Singapore have not walked the talk involves private assets, due to a lack of confidence and understanding of the non-listed and privately held assets. These include government-owned or linked investments.
“As with sustainable investments, here is a gap that needs to be bridged in terms of fully realising the potential for private market investments particularly during these times of macroeconomic and broad market uncertainty,” Lombard Odier wrote in the report, adding that returns from Asia-Pacific-focused private equity funds outperformed those of public markets in 2022.
But private assets are not suitable for everyone due to their long term and illiquid nature. For those with the ability to stay invested and follow a multi-year investment strategy, they can be an important element in a well-balanced portfolio, according to the report.
The report showed that the rich in Singapore share a common hesitancy with their regional peers when it comes to communicating personal goals and turning opinion into action. More than 60 per cent think their parents and siblings have different goals than they do.
Mr Vincent Magnenat, Lombard Odier’s limited partner, Asia regional head and global head of strategic alliance, said: “There is a dichotomy between HNWIs’ intentions and actions across the themes of achieving personal goals, sustainable investing, private assets and aligning family goals.”
Such pent-up issues can become a powder keg that leads to poor financial decisions, losses or higher costs, he added.
The study also reflected a divide in the perspectives between generations, just as an estimated US$2.5 trillion is set to be passed on to the next generation over the next decade by about 70,000 HNWIs in the region.
Regionally, those under 45 years old place more importance on buying a property, investing in their own business, or seeking to improve their lifestyle.
Women consider improving their lifestyle, sustainability and transferring wealth to children to be essential goals, more so than men.
