Shifting appetite among Asia's rich could lift investments in alternative assets

Business Times

a day ago

[SINGAPORE] More of Asia's richest are viewing private-market investments as a core part of their portfolios, say senior private bankers. With allocations ranging from the single digits up to 15 per cent of their portfolios to the asset class, this could translate to as much as US$1.5 million per investor.
If this trend continues, the total assets under management (AUM) in private markets by individuals, each with a net worth of US$10 million, could hit US$1.39 trillion in Asia by 2028, going by a back-of-the-envelope estimate by The Business Times.
The sum was derived from Knight Frank's 2025 Wealth Report, which forecasts the number of these wealthy Asia-based individuals to grow to 928,722 in 2028.
The report noted that this group stood at 854,465 in 2024, meaning that as much as US$1.28 trillion could be invested in alternative assets .
Alternative assets, which comprise private-market investments in equity, credit, real estate and infrastructure, have traditionally been the domain of institutional investors such as pension funds, but rich retail investors are now wanting a piece of the action.
As such assets are less liquid and transparent than publicly traded assets such as stocks and bonds, countries generally impose guard rails to restrict the access that retail investors have to these private assets.
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In Singapore, investors who are not private-banking clients – but whose investable assets range from S$5 million at DBS and UOB to US$10 million at Standard Chartered – would generally need to be accredited investors to invest in such instruments.
Nicholas Cheng, head of private markets group at Standard Chartered Global Private Bank, told BT that there is a clear trend of private-banking clients in Asia allocating more to alternative assets over the past five years.
'Previously, private-market investments might have been seen as opportunistic, 'nice-to-have' additions. Now, they are increasingly viewed as core, strategic components of a well-diversified portfolio. Clients are actively building long-term allocations, understanding the role these assets play in their overall wealth strategy.'
In general, StanChart's private-banking clients allocate 15 per cent of their portfolios to such assets.
Diversifying away from public markets
Such investors find alternative assets appealing because these instruments allow them to diversify away from equities, which can be volatile in times of uncertainty. In addition, Asia's rich want to increase their exposure to private companies, which may want to stay that way.
Chee Jiun Wen, head of alternative investments at Bank of Singapore, said: 'As companies stay private for longer, investors seek alpha generation, and as the emphasis on portfolio diversification grows, we believe opportunities and access to alternative investments should only continue to expand for our clients.'
Hamilton Lane, one of the world's biggest private-market investment firms with more than US$958 billion in AUM and supervision, said that 87 per cent of US companies with revenues exceeding US$100 million were private as at early-2022 – and this was just the year following 2021, a record year for initial public offerings, when companies raised US$316.6 billion on US bourses.
Private-banking clients are also comfortable with the illiquidity premium that alternative assets offer. This is the premium that these investments offer to investors, to entice them away from publicly traded, more-liquid instruments.
Mathieu Forcioli, global and Asia-Pacific regional head of alternatives, wealth and premier solutions at HSBC, said: 'Private-market investing introduces an element of illiquidity in an investment portfolio. Over the past years, our clients have been assessing the amount of illiquidity risk they can take, and have been able to invest outside publicly traded instruments, with the aim of improving the risk/return profile of their portfolio.'
HSBC recommends an 11 per cent allocation to alternative assets for those with medium-risk portfolios.
As Asia's rich become more familiar and comfortable with investing in alternative assets, they are likely to continue raising their exposure, market observers said.
Investing more in alternative assets
The private banks that BT approached say their clients' AUM in alternative assets has grown strongly in the past few years. Declining to go into specifics, UOB reported that the figure jumped more than five times between January 2023 and May 2025.
At Bank of Singapore, the inflows to alternative investments surged more than 80 per cent in 2024 from the year prior.
The Monetary Authority of Singapore's latest annual survey of the local asset-management industry showed the total AUM in alternatives hit nearly S$1.39 trillion in 2024, up 14 per cent from 2023. In private equity and venture capital, the biggest component, AUM rose 20 per cent to S$789 billion.
With increasing sophistication in alternative assets, UOB Private Bank's clients are diversifying within private markets.
Wong Meng Keet, head of managed products and alternative investments at UOB Private Bank, said: 'Previously, clients interested in alternatives would typically have a combination of investments in hedge funds and private equity. Today, they are spreading their investments across a wider range of options, and it is not unusual for clients to have a combination of private equity, private credit, private real estate and private infrastructure.'
Banks are launching more products to cater to the expanding appetite, including the so-called semi-liquid funds that offer periodic redemption opportunities.
As open-ended funds that provide ongoing access, investors can stay invested for as long as they choose. They are more palatable to retail investors, compared to the closed-ended funds that cater largely to institutional investors with deeper pockets and longer investment horizons.
US$50 million ticket size
On the higher end of the wealth spectrum, DBS Private Bank and Hamilton Lane launched a product in June catering to the bank's ultra-high-net-worth (UHNW) clients and family offices.
With a minimum ticket size of US$50 million, each of these clients can set up a portfolio of private-asset investments tailored by Hamilton Lane, in its first such partnership with DBS.
The product has 'garnered strong interest' among DBS' clients since its launch. The bank signed a mandate with a family office where the chief investment officer hails from a commodities trading background and is 'relatively unfamiliar' with investing in private assets, DBS told BT.
Kerrine Koh, head of South-east Asia at Hamilton Lane, said the partnership sprung from the firm's observation that UHNW investors often have 'unique objectives, risk tolerance and risk preferences', and that off-the-shelf products may not meet these needs.
On the opposite end of the spectrum, accredited investors who are not private-banking clients can access alternative assets at StanChart and OCBC. These are individuals with net personal assets of more than S$2 million, or with an annual income of S$300,000.
Priority banking clients at Stanchart with at least S$200,000 in deposits and who are accredited investors in Singapore can make investments in private-market funds. These include a European private-credit fund that the bank launched in February.
Accredited investors at OCBC have three private-market funds to choose from. The bank started offering the Blackstone Private Credit Fund in 2022, and added the Apollo Aligned Alternatives Fund this year.
This month, the bank added a private-credit fund with a Singapore-dollar share class for the first time, to cater to those who prefer to invest in the local currency, he added.
Strong interest in these products 'propelled our private-market funds' AUM 2.5 times in one year', said Timothy Liew, head of investments at OCBC.