Credit Suisse: Alts a ‘massive opportunity’ for Asia’s UHNWIs

Credit Suisse’s head of private banking for Asia, François Monnet, has said the firm recommends UHNWIs allocate up to 25% to alternative asset classes.

Alternative assets represent a “massive opportunity” for wealthy Asian investors, according to Credit Suisse’s head of private banking for North Asia.

Francois Monnet Credit Suisse
Monnet: We are private markets fanatics

Speaking at the virtual Asian Financial Forum on Tuesday, François Monnet, who also serves as chief executive of the bank’s Hong Kong branch, said ultra-high-net-worth individuals in the region do not have enough exposure to alternatives.

“We are very determined to take a portfolio-centric approach to advisory, which implies that alternative assets per se have a very important role to play in the total portfolio,” Monnet said.

“Our recommendation would be to aim for a penetration of up to 20, 25 percent of that portfolio. The reality unfortunately in Asia is a bit different […] When you sum it up the penetration is a single digit.”

Asia is expected to supplant Europe as world’s second largest UHNWI hub by 2024, according to Knight Frank’s Wealth Report 2020. The average Asian UHNWI portfolio had a 7 percent allocation to private equity last year, versus 11 percent in North America and 8 percent in Europe. Some 32 percent of bankers and advisors expect clients in the region to raise their allocation in the near-future, while 24 percent anticipate a reduction.

Property is the preferred asset of Asian UHNWIs, accounting for 28 percent of the portfolio on average, followed by equities and bonds at 21 percent and 19 percent respectively.

“There is a love story between Asians and real estate, but they do it by themselves; they don’t need a private bank, on average,” Monnet added. “We have a very decent [private equity] business but the ultra-high, very rich clients […] also have quite some network to do it by themselves.”

Credit Suisse offers its clients access to private markets via private equity, pre-IPO private placements and private credit opportunities, Monnet noted.

“There is one space where we really are pretty fanatic about: this is the private market space,” he said. “We all know that returns are pretty significant in that area, selectively of course, but also that fundamentally this market grows at a rate that is 50 percent faster than the listed market. So it’s a really buoyant place to be.”

Online fundraising platforms are also trying to lure wealthy Asians to private markets. Berlin-based Moonfare opened an office in Hong Kong last year and expects the region to account for 25 percent of its fundraising in 2021, PEI reported last month. iCapital Network, one of the largest such platforms, also plans to open a Singapore office.