Private-market investments open door to new opportunities – even in times of uncertainty
- High-end products provide investors with more diversity and greater flexibility to help achieve optimum results
- HSBC allows high-net-worth investors to capitalise on a range of investment opportunities to build holistic wealth solution portfolios
Investors are currently experiencing a period of heightened volatility due to global market uncertainty. High inflation, rising interest rates and economies still recovering from the impact of the Covid-19 pandemic have created a challenging investment landscape.
The current volatility heightens the importance of having a well-diversified portfolio. For high-net-worth individuals (HNWIs) who hold a professional investor status, private-market assets help them achieve diversity as well as offer new investment opportunities.
One of the main advantages of private-market investments is the alternative source of risk and return they represent, with the correlation between certain private-market assets and their public-market counterparts generally low. They can also produce competitive returns as they typically capture companies in their growth phase, ahead of them being listed.
Sami Abouzahr, head of investments and wealth solutions, wealth and personal banking in Hong Kong at HSBC, explains: “Private-market investment products provide professional investors with higher flexibility and participation in more diverse investment markets and sectors.
“They complement investments that are available in the public market, and help clients achieve the optimal result of overall asset allocation in their investment portfolios.”
Despite the many advantages private-market investments offer, it was previously difficult for individual investors to gain access to them. But that situation is changing, with HSBC offering its professional investor clients, who have HK$8 million (US$1.03 million) or more in investable assets, a suite of private-market investments to enable them to seize opportunities in times of market uncertainty.
“HSBC helps professional investor clients cut through the noise of market volatility to capture investment opportunities with diverse offerings in private-market investments, harnessing technology to stay abreast of market changes,” Abouzahr says.
Through its Dedicated Bonds services, HSBC is offering professional investor clients exclusive access to the bond market – an opportunity normally only available to institutional investors and private-banking clients.
This allows them to enjoy new issue premiums and better market liquidity. It also opens up a wider spectrum of solutions, including Private Placement Bonds, all with lower trading costs and without additional management fees.
Alongside the need for portfolio diversification, investors also need to search for yield in the fairly low interest-rate environment. Structured products, such as Private Placement Notes, offer professional investors the opportunity to access higher potential returns under different market conditions.
Private Placement Notes can grant access to the world’s popular indices, more than 250 Hong Kong and United States-listed securities, covering major stocks and exchange-traded funds (ETFs). Different product types including principal protected payoffs can be customised and matched to clients’ investment needs. They have a range of payout structures to capture opportunities under various market situations.
Through offering Professional Investor clients access to private-market investments beyond the traditional asset classes of equities and bonds, HSBC provides an important alternative source of enhanced potential returns and downside protection.
For example, private-equity funds could provide exclusive exposure to private real estate investments worldwide, which provide for dividend payouts and higher liquidity than direct investment in private equity with no capital lock-up or capital calls.
HSBC’s hedge fund solutions can also complement traditional asset classes in a portfolio, using a range of long-short strategies to respond to different global macro situations to achieve steady potential returns.
It also offers its professional investor clients access to equity placements, through which they can take part in discounted Hong Kong equity share placements not widely available to retail investors, and special-purpose acquisition companies’ (SPACs) IPOs.
“As high-net-worth clients become more sophisticated and financially savvy, the demand for a wider and more exclusive selection of investment products continues to grow, and so does the need for holistic portfolio review and in-depth market insights,” says Brian Hui, head of customer propositions and marketing, wealth and personal banking in Hong Kong at HSBC.
HSBC’s wealth offerings are further enhanced by its portfolio-based advisory service, Wealth Portfolio Plus, which provides professional investors with personalised, tailor-made recommendations and institutional-grade risk analysis, leveraging Aladdin Wealth¹.
With Wealth Portfolio Plus, professional investor clients can get deeper insights into their portfolios and visualise the benefits of diversification through wealth projections up to 30 years in the future. They can monitor their portfolios digitally through the HSBC mobile app as well as through online banking, and test it against different market scenarios.
This service takes into consideration the risk level of a client’s overall portfolio, while maximising returns using a wide range of products. Jade Directors can help clients identify investment options that suit different scenarios and their evolving risk appetite.
“As a trusted investment partner, we strive to exceed our clients’ expectations and fuel their wealth journey with more sophisticated products and holistic wealth solutions,” Hui says.
¹ Aladdin Wealth’s technology is provided by BlackRock Financial Management. Its unique technology provides technical support and professional services for asset managers, investment institutions and wealth management companies.
Investors may become a Professional Investor if they have HK$8 million or the equivalent in investable assets, including stocks, bonds, unit trusts and equity-linked investments based on market value, Certificates of Deposit, and cash and cash equivalents.
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