For years, wealth managers and private banks have been regaled with the case for loading up on "alternatives" – a term ranging from private equity to hedge funds.

HNW clients of UBS want to buy more alternative assets and spread risks amid volatile markets, Iqbal Khan (main picture), the Swiss bank’s Asia-Pacific chief has said.

“We see continued demand” for alternatives, Khan told Bloomberg in Hong Kong at the UBS Asian Investment Conference yesterday.

For years, private banks and wealth managers have talked about a need to expand client access to alternative investments, a term spanning private equity, private credit, infrastructure, commodities, real estate, and hedge funds. (There is debate about whether hedge funds are really "alternative assets" or different ways to play in certain markets.) Large firms in the private markets area, such as Carlyle, Blackstone and KKR, have built out private wealth arms, as they see HNW and UHNW individuals, including family offices, as important sources of growth.

A report in 2023 from consulting firm Bain & Co found that ultra-HNW investors and family offices with more than $30 million in assets already have 22 per cent invested in alternatives. Those with $5 million to $30 million in assets allocate 3 per cent to alternatives on average; for those with $1 million to $5 million, it is just 0.7 per cent. 

“We’ve definitely seen a significant growth of alternatives and alternatives investments in client portfolios,” Khan is quoted as saying. “It is still at a lower percentage when you think about an aggregated perspective of wealth portfolios. So, there is probably some way to go in terms of diversification into alts.”

Khan, who relocated to Hong Kong last year and is also co-president for global wealth management, reportedly said that he expects lower interest rates and continues to see the potential for a stagflation environment. 

In late January, a report by BNY found that less than 3 per cent of HNW portfolios hold alternative assets. The survey – drawn from the US –found that during the coming next 10 years, private wealthy investors will load up $12 trillion from $4 trillion on alternatives.