The recalibration

Our HNW Pulse Survey paints a similar picture, with just under a third of respondents stating that their main goal is capital appreciation, while around a quarter are targeting preservation.

The picture is nuanced globally, with HNWIs across Asia-Pacific looking for growth, while preservation is the number one goal in Europe and America – perhaps unsurprising, given the economic slowdown under way across Europe and the anticipated downturn in the US as higher interest rates take their toll. However, 2023 has begun with renewed optimism and a more positive outlook than we saw in December 2022.

How is this impacting investment decisions?

Almost half of HNWIs are looking to increase their portfolio in 2023. For the first time in over a decade, the return on cash has gone from sub-1% to more than 4% in the US: as a result, 46% are looking to increase cash reserves. The flip side is that, with rising interest rates, 29% are looking to reduce debt levels and only 27% to take on more. The appetite to deleverage is highest among Europeans.

As we highlighted in our Outlook Report 2023 real estate was a top cited opportunity, and our HNW Pulse Survey indicates that property holdings are likely to increase. Whether for the perceived inflation hedge, diversification benefits, or as a boon in times of uncertainty, a third of HNWIs are looking to increase their residential holdings, while 28% will seek to increase their commercial property holdings. Our experts provide an overview of trends and opportunities on pages 24 and 46.

Despite the economic uncertainty, global movement looks set to continue (see page 10) with four in ten HNWIs planning to increase travel overseas. A similar proportion plan to increase personal expenditure on leisure activities. Whether due to an ongoing reassessment of lifestyles or continuing pent-up demand from the pandemic, the economic outlook appears brighter.

While there may be elements of “hunker down and ride it out” with some HNWIs not changing allocations, there will still be healthy activity in global markets – especially among those looking to volatility as an opportunity.