UHNWI Overexposed to Domestic Markets

According to KKR, many ultra-high-net-worth individuals have over concentrated their investments in domestic markets, primarily in the U.S. or Europe. We believe exposure to farmland Investments in emerging markets can mitigate regional risks and provide a more balanced portfolio.

In today's shifting global economy, Ultra High Net Worth Investors (UHNWIs) find themselves uniquely positioned to capitalize on emerging opportunities across both public and private markets. Their patient capital allows them to embrace complexity and illiquidity, setting them apart in an increasingly intricate investment environment.

However, the road ahead isn't without challenges. Anticipated lower returns and heightened volatility demand more flexible asset allocation strategies. UHNWIs must adapt their portfolios to maintain attractive risk-adjusted returns amid changing market conditions.

Key Insights for UHNWIs:

• Asset Allocation: A significant 46% of UHNWI assets are in alternative investments, compared to 24% for pension funds, highlighting a strong preference for illiquid assets.

• Challenges Ahead: Expected returns are projected to drop from 9.3% to 5.3%, necessitating portfolio repositioning to leverage market dislocations and volatility.

• Risk Factors: Home market bias, insufficient hedging, and concentration in certain asset classes pose risks to future returns.

UHNWIs must remain vigilant. Addressing concentration risks, mitigating home market biases, and enhancing risk hedging are essential steps forward. Empowering CIOs with greater autonomy will enable more responsive and strategic asset allocation, aligning investments with the evolving financial terrain.

In sum, agility and proactive portfolio management are key. By adapting to market shifts and embracing strategic flexibility, UHNWIs can continue to achieve robust, risk-adjusted returns despite the challenges on the horizon.