The world’s richest are taking a risk-on approach to investing in 2024, new research has found, as high net worth individuals swap safe havens like cash for property and private equity.
The proportion of cash holdings in wealthy investors’ portfolios dropped from 34% in 2023 to 25% in 2024 in a reversal of last year’s trends, according to the Capgemini Research Institute’s World Wealth Report, while real estate, fixed income and alternative investments are building share amid cooling inflation, falling interest rates and a rebound in optimism over the global economic outlook.
Two in three high net worth individuals plan to invest more in private equity during 2024, the research found, with the enthusiasm driven by long-term higher returns and portfolio diversification.
Wealthy investors also appear to be becoming more interested in digital assets like cryptocurrencies, with over 77% of wealth management executives either maintaining or increasing digital asset investments.
Gareth Wilson, Capgemini head of UK banking and capital markets, told the Standard: “When we compare 2023 with 2022, there’s certainly increased confidence and more bullish outlook among high net worth individuals.
“There’s still clearly concerns over the geopolitical situation around the globe and uncertainty with electoral activity in some of the world’s largest economies.
“But there’s also an appetite to look more broadly at their portfolio, away from the conservatism of cash to fixed income, property and private equity.”
It comes as the share of global wealth represented by high net worth individuals hit fresh levels, rising by 4.7% on last year to reach $86.8 trillion (£68 trillion).
The strongest recovery in portfolio values was among investors in the US, with a wealth increase of 7.2%, while the Asia-Pacific (4.2%) and Europe (3.9%) regions grew more modestly and Africa contracted by 1%.
More than a third (34%) of the total wealth of high net worth individuals (HNWIs) is now thought to be held by the top 1% of HNWIs, while as much as 20% of HNWIs are now under the age of 40 in signs of major intergenerational wealth transfers.
