HSBC Private Bank in Asia has registered over $1bn inflows into alternative assets as that shift gathers pace globally.
More institutional investors are turning to property, infrastructure, private equity and hedge funds in search of better returns as long-only assets experienced market headwinds.
For the first half of 2018, HSBC Private Banking reported a 500% increase in year-on-year inflows in Asia. The bank told specialised media outlet Asian Private Banker that client demand was diversified across private markets and hedge funds.
Asset purchasing programmes by central banks in response to the financial crisis have led to strong gains and stretched valuations across many publicly traded bond and equity markets, helping to strengthen the attraction of alternatives to large investors.
“We are observing growing interest in Asia for hedge funds as clients are increasingly seeking greater diversification and uncorrelated exposure to their equity exposure,” Edward Moon, managing director and Asia regional head of alternative investments at HSBC Private Banking, told Asian Private Banker.
Threats in global markets like the possibility of US-led trade war and rising rates have put pressure on traditional long-only assets. A scenario that has pushed Asian banks to advise clients to add alternative exposure in their portfolios to cope with upcoming volatility.
As investors shift their investments towards alternatives, the focus is increasingly on hedge funds and private equity, with infrastructure and real estate being the preferred asset classes.
Last year, total alternative assets under management globally stood at $6.5tn spread across 562 managers.