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Endowus Private Wealth Insights Report: 1 in 3 HNW investors in Singapore cite a preference towards digital platforms for private markets and hedge fund investing, desiring greater transparency on product information and fees over relationship manager interaction

May 2024
  • A new study by Endowus Private Wealth on High Net Worth (HNW) investors has found that digital investment platforms are the preferred mode of access for private market and hedge fund investing in Singapore (37%) and Hong Kong (57%)
  • In comparison, only 1 in 5 Singapore respondents (21%) cited a preference for investing through a relationship manager, reflecting a burgeoning shift towards self-directed investing among HNW individuals here
  • The survey also uncovered the intention to shift more assets into private market strategies (42%) and hedge funds, as well as real assets (37%)
  • The ability to manage private and public market exposures holistically is a key deciding factor for those looking to increase allocations to private market investments 

Asia’s leading digital wealth platform Endowus has released the Endowus Private Wealth Insights: HNW Investor Sentiment 2024 report, shedding light on the preferences and current barriers faced by nearly 500 HNW respondents in key financial hubs, Singapore and Hong Kong, when accessing and managing their private market and hedge fund  investments. 

Uncovering their sentiments for the year ahead, the study conducted by Endowus Private Wealth (EPW) reveals that better investment returns is the top priority for HNW investors in Singapore (48%), followed by concerns such as keeping up with inflation, excessive risk taking, diversification and high fees. 

This differs slightly from Hong Kong, whose respondents ranked greater portfolio diversification and succession planning as the top concerns.  

Concerns about portfolio

What are your biggest areas of concern regarding your investment portfolio right now? 

More than half of respondents in both markets also indicated that they are “optimistic” or “very optimistic” about the 2024 economic outlook, with Singapore investors demonstrating a slightly higher risk appetite (71%) to grow their capital than their Hong Kong counterparts (66%). Taken together, these insights signal a growing demand among HNW investors surveyed for private market strategies and hedge fund exposure, due to the advantage these asset classes provide in lower correlation to public markets, a source of diversification, and presumably better risk-adjusted returns over the long term.

Correspondingly, the Endowus Private Wealth Insights: HNW Investor Sentiment 2024 report reaffirms the largely untapped opportunity within private market investments, especially in Singapore, where private equity and private real estate are among the top three unexplored asset classes). One in three Singapore respondents (32%) stated they have never invested in private market strategies or hedge funds, as compared to only 8% of respondents in Hong Kong. 

Of those in Singapore who are currently invested in private market strategies and other forms of alternative asset classes (both financial and non-financial), almost 3 in 5 (58%) intend to increase their allocations this year. 

Appetite for increasing allocation

In 2024, do you intend to increase your allocation in public markets, private market strategies & hedge funds, or real assets?

Samuel Rhee, co-founder and Chief Investment Officer of Endowus, said, “We are excited that the findings from the first Endowus Private Wealth Insights report reinforce the growing need among HNW investors to build portfolios with both traditional and alternative asset classes. In particular, 42% of Singaporean respondents wanted greater access to private market strategies and hedge funds to mitigate overall risk and lower volatility. This is why Endowus is working with some of the largest global players in the private markets to continually broaden our offerings to democratise access to institutional-grade products and solutions at a fair, transparent price. We have already made available a broad collection of private equity, private credit, private real estate, and absolute return multi-strategy hedge fund solutions, all while ensuring improved liquidity and lower minimums to be eligible for access. We’re committed to allowing access to never-seen-before opportunities for, and setting HNW investors up for success.” 

Digital investment platforms is top preferred avenue to access private market strategies and hedge funds in Singapore and Hong Kong

Across both markets, there is a notable shift towards digital investment platforms for private market and hedge funds investments. When asked about their current mode for private markets and hedge fund investments, the majority of respondents stated digital platforms as both their current (51% in Singapore; 81% in Hong Kong) and preferred (37% in Singapore; 57% in Hong Kong) mode of access into private market strategies. 

Preferred access to private market strategies and hedge funds

What is your preferred mode of investing in private market strategies?

Even though 45% of Singapore respondents picked "private banking services through relationship managers" as their current avenue of investing in private assets, only 21% considered it their preferred mode of access. The waning dependence on relationship managers may suggest increased sophistication in the client base, sensitivity to fees, a desire for lower minimum ticket sizes, information transparency, and being served through conflict-free business models.

This trend is mirrored by an observed shift towards self-directedness, or self-managed portfolios in Singapore. A majority (71%) of Singapore respondents indicate that they manage their investment portfolios (across public and private markets) entirely or mostly on their own, contrasting with the majority (60%) in Hong Kong who manage their investments mostly with the help of a relationship manager or financial advisor. 

Portfolio management 

Do you manage your investments on your own, or engage the help of a financial advisor? 

The findings underscore two important market trends: a decrease in dependence on traditional financial advisors or relationship managers, and correlationally, an increase in preference for digital experiences when it comes to investing in public markets, private market strategies and hedge funds.

Technology plays a pivotal role in democratising access to these traditionally exclusive asset classes and strategies, particularly for the scale it achieves to enable a lower cost to serve, and lower minimums for greater access. This shift highlights the value HNW investors place on convenience, accessibility, and the diversity of offerings provided by platforms to empower individuals to manage their investment portfolios independently. 

Cost and complexity: key barriers that discourage investors from starting or investing more in private market strategies and hedge funds

Respondents in Singapore who have yet to begin investing in private market strategies and hedge funds identified high fees (44%) as their biggest barrier, followed by the lack of know-how and the right knowledge (40%), and the lack of publicly available information (40%) such as fund performance data and prospectuses. 

These findings show that high fees, along with knowledge gaps, are significant barriers for HNW investors in Singapore to start investing in private market strategies and hedge funds. Improving fee transparency, educating on investment philosophies and strategies, independent advice, as well as access to digestible fund performance data that provides insight on historical performance, target returns and more, are crucial in giving HNW investors greater confidence in making informed decisions to take first steps in exploring these asset classes. 

Respondents who have already invested in private market strategies and hedge funds – and intend to allocate more to these asset classes – cited their top barrier as the difficulty involved in managing private and public market investment portfolios on different platforms (37%), followed by high minimum investments (35%), and the lack of publicly available information (32%).  

Investors value a holistic platform to seamlessly offer a wide array of asset classes to streamline their investment management experience. 

HNW investors are looking for trusted wealth managers that can provide advice that are aligned with their needs 

When choosing wealth management services, the report finds that respondents in Hong Kong and Singapore prioritise the “quality of service rendered” (43%), “transparent and low fees” (42%), followed by “trusted brand and reputation” (37%).

“Service quality” was defined in the survey as encompassing financial advice and recommendations given, and whether investors feel that their questions have been addressed adequately. HNW investors in both markets emphasise the importance of trusted wealth managers who can offer unbiased advice, expert views that align to their financial goals rather than driven by sales commissions, and at a fair cost.

The data further showed that Singapore respondents rely heavily on professional sources of financial advice from within the industry, such as wealth platforms (56%), online financial sites (55%) and relationship managers (53%). However, a larger proportion expressed satisfaction with advice received from friends and family (83% satisfaction), as well as business connections (85% satisfaction), despite consulting them the least.

Sources of financial advice and satisfaction

What sources of financial advice do you use? How do you feel about the advice you have received from each source?

This suggests an ostensibly larger problem within the financial industry. Wealth recommendations and advice rendered may be driven by sales commissions, creating misalignment and a clear conflict of interest, as compared to one’s inner circle of personal connections who may not be experts on the subject matter. 

Gregory Van, co-founder and CEO of Endowus, added, “Investors are rightfully demanding more transparency, product access, advice free of conflicts, and conveniences of the digital age. At Endowus, we take pride in our industry-leading fee-only business model, unique hybrid human and digital client advisory process, leveraging wealthtech to provide an integrated wealth management experience with zero conflicts of interest to clients – retail and accredited investors, institutions and family offices – at scale.”

The full Endowus Private Wealth Insights: HNW Investor Sentiment 2024 report can be downloaded here

Download the full appendix here.