The appearance of distinct geographic preferences in behavior of the wealthy worldwide and investing preferences among them are two of the findings of a survey released Tuesday by Citigroup Inc.'s private bank.
The survey also found global commonalities such as a tendency among ultra-affluent investors to question broad asset allocation strategies and to fall into some of the same pitfalls as the wider investor population when making investment decisions.
The private bank asked investors with a net worth of more than $25 million how they manage their wealth, their investment priorities, and their risk profiles. More than 60% of those questioned had a net worth of more than $100 million. The survey report compiles responses from 120 one-on-one interviews with investors in the United States, Latin America, Europe, the Middle East, and the Asia-Pacific region. McKinsey & Co., an international management consulting firm, helped with the interviews and compiling the report.
Regional trends included U.S. investors' strong demand for and knowledge of alternative products, Middle East respondents' preference for real estate and capital-protected products, Europeans' increasing interest in hard assets such as art or real estate, Asia-Pacific investors' desire for local investment opportunities, and Latin Americans' focus on the importance of their financial institution's strength and not necessarily a particular asset class.
Some themes were consistent around the world. Ultra-affluent investors can often chase riskier short-term performance (both across asset classes and between investment managers), may try to time the market, or may underweight unfamiliar asset classes in their portfolios. Surprisingly few ultra-affluent investors focused on asset allocation as an important wealth management tool; like lower-tier investors, they appeared to be largely unaware of - or skeptical about - the benefits of strategic asset allocation.
