BNP Paribas has shared global insights into their wealthiest business-owner and family clients
Equities remain the top focus for asset allocations by elite entrepreneurs and multi-generational families in 2021.
That’s a key takeaway of the latest research from global wealth manager BNP Paribas which polled clients worldwide with an average US$17.2 million in investible assets.
More than half of respondents increased their equities holdings over the past year, especially those in Asia Pacific. Allocations to private equity were also increased by 53% of investors.
“Equity and private equity are two growth asset classes where entrepreneurs have clearly gone for growth in their portfolio allocations. This has proved to be the correct choice in hindsight with very strong performance both from the listed equity markets and private equity funds, from the lows seen in March 2020 up until today” explains Edmund Shing, global chief investment officer at BNP Paribas Wealth Management.
Real estate has also proved attractive to ultra-high-net-worth individuals and families, but there is concern among some investors around commercial real estate, given the changing shape of the work environment and a continued shift in retail.
However, Shing says that a positive view of real estate is appropriate.
“Not only has real estate outperformed global equity markets since 2001 on average, but also it tends to outperform following recession, which is our current environment now,” he said.
Stock market volatility is a concern, especially to those in North America, but there is global concern about inflation, the changing tax environment, and corporate debt.
Smart tech investing
Many of the wealthy investors polled said that technology is a key area for them.
Investment in enabling smart technologies such as health, artificial intelligence, and 5G are a focus for 82% of respondents.
The energy transition and green economy are also a big area with 76% of respondents already investing in these areas or planning to do so in the next 12 months. These investments include those around food and clean water (food production, new consumption trends such as veganism, agricultural technology).
Going private
Richard Clarke-Jervoise, global head of private equity and private debt for BNP Paribas Wealth Management, says that private equity remains a core asset class among entrepreneurs and families.
“This reflects their natural affinity with entrepreneur-led businesses as well as the higher returns and diversification that the asset-class offers,” he explained. “Private investments have proved to be an excellent way for entrepreneurs and families to address key investment themes. These include accessing fast-growing companies and investing in inflation-protected assets such as infrastructure.”
He added that these are examples of areas where private investments have a structural ‘edge’ over public markets and are highly complementary with a traditional equities allocation.
The full report is available at https://wealthmanagement.bnpparibas
