According to new research from Capgemini, wealthy global investors have an increased appetite for private equity, structured products and digital assets in 2024, alongside rising allocations to fixed income.

In an environment of high interest rates and inflation, high net worth investors (HNWIs) are increasingly modifying their primary asset allocations from preservation to growth and are looking to alternatives to do so.

Capgemini’s latest world wealth report found that HNWIs increased their alternatives allocations to 15% in 2024, up from 13% in 2023

Capgemini’s latest world wealth report found that HNWIs increased their alternatives allocations to 15% in 2024, up from 13% in 2023.

The report which reflects the views of over 3,000 HNWIs, 750 relationship managers and 75 wealth management executives from around the world, unveiled that the desire to diversify into high-return asset classes is driving increased HNWI interest in alternative investments - including commodities, currencies, private equity, hedge funds, structured products and digital assets – with overall allocations rising from 13% to 15% in 2022.

Particularly, HNWIs voiced a preference for private equity, with some 68% planning to increase allocations to the asset class in 2024, driven by hopes for long-term higher returns and portfolio diversification.

The trend came alongside decreased allocations to cash and cash equivalents, which fell to 25% in 2024. In alternatives, there was also an increased interest in digital assets with 77% of wealth management executives either maintaining or increasing their digital asset investments.

Looking at other allocations, Capgemini found fixed income remained another popular asset class, with allocations increasing to 20% in 2024, up from 15% in 2023.

Overall, the report found global HNWI wealth expanded by 4.7% in 2023 reaching US$86.8 trillion. Australia notched HNWI wealth growth of 7.9%, behind India at 12.4%.

Libra Insurance partners with Luma

Libra Insurance Partners, the largest independently owned life insurance marketing organisation (IMO) in the US, has entered into a partnership with Luma Financial Technologies

This collaboration equips Libra’s partner firms with the tools needed to meet the increasing demand for modern annuity offerings, according to Jon Jacobs (right), senior vice president of business development at Libra.

'Our partnership with Luma will allow Libra partner firms to tap into one of the most dynamic platforms in market that is known for meeting the needs of financial advisors, independent agents, benefits brokers and more who seek to satisfy the ever-growing demand for modern annuity solutions,” said Jacobs.

The partnership expands Luma’s reach within independent insurance distribution networks; while Libra’s partner firms will benefit from the fintech's product-centric learning features, a comprehensive annuity product marketplace, product comparison functionality, predictive analytics and carrier illustrations, and entire lifecycle management capabilities.

Libra selected Luma for its commitment to supporting the independent insurance distribution network.

NSE rolls out new Nifty index targeting value investors

NSE Indices, a subsidiary of the National Stock Exchange of India (NSE), has launched a new index aimed at investors seeking value stocks.

The Nifty200 Value 30 Index tracks the performance of 30 companies selected from the broader Nifty 200 index based on their value characteristics.

The Nifty200 Value 30 uses a combination of metrics to identify undervalued companies, including earnings per share (E/P), book value per share (B/P), sales per share (S/P), and dividend yield. This approach focuses on companies with strong fundamentals that may be trading at a discount compared to their true worth.

The weight of each company in the Nifty200 Value 30 Index is determined by a combination of its value score and its free-float market capitalization. Additionally, stock weights are capped at the lower of five percent or five times the weight of the stock in the index based only on free float market capitalisation.

The Nifty200 Value 30 Index has been designed to serve as a benchmark for asset managers and passive investment products like exchange traded funds (ETFs), index funds, and structured products. Back-testing shows a strong historical performance with a total return (YTD) of 26.43% as of 12 June 2024. It has surged 93.41% in one year and clocked a CAGR of 28.59% in five years.

The Nifty200 Value 30 Index was launched on June 12, 2024. The index has a base date of 1 April 2005 and a base value of 1000. It will be rebalanced semi-annually and currently consists of 30 companies.

Halo broadens buyside pool across GCC

Alpheya, an Abu Dhabi-based wealth management technology platform for financial institutions, and US multi-issuer structured products platform Halo Investing, have signed a partnership agreement to broaden access to structured products for top banks, wealth managers, and family offices in the region.

Structured products have seen a surge in demand in recent years with the total structured product market accounting for over US$7 trillion in invested assets.

However, Middle East investors have a far lower allocation to structured products in comparison to North American, European, and Asian markets, marking a sizeable opportunity for growth. 

'With plans to go live in early 2025 and with an initial focus on the GCC, this partnership aims to give millions of Middle East investors access to a curated set of structured products along with education and training for advisors and investors,' said Sadiq Hussain (right), senior executive officer at Halo Investing.

The partnership's deep technical integration will enable clients to seamlessly manage and optimise their investment portfolios. This pre-integration also significantly simplifies the onboarding process for new clients, providing easier access to a comprehensive set of financial products, according to Matt Radgowski, CEO of Halo Investing.

"'[The partnership] eliminates barriers to participation in structured notes in the GCC, enabling broader access to solutions once leveraged only by institutions and high-net-worth investors,” said Radgowski.

New Zealand regulator restricts CfDs leverage to 30:1

The Financial Markets Authority (FMA)—Te Mana Tātai Hokohoko—is following in the footsteps of its Australian counterpart and is seeking consultation on restricting leverage for derivatives, including contracts for differences (CfDs), offered to retail investors.

The consultation paper released last week also focuses on assessing the suitability of retail investors for derivatives trading.

The proposed changes regarding the offered leverages are similar to those introduced by other top regulators: 30:1 for major currency pairs, 20:1 for minor currency pairs, gold, and major stock market indices, 10:1 for commodities (excluding gold) and minor stock market indices, 2:1 for cryptocurrencies, and 5:1 for equity securities and other underlying assets.

Currently, with no leverage restriction in place, many brokers offer leverage up to 500:1 to retail investors - the regulator revealed that it has observed that the number of margin calls per investor is significantly higher for brokers offering high leverage levels.

The FMA pointed out that while some jurisdictions only set leverage limits for selected over-the-counter (OTC) products, like CfDs or forex, it proposes limits that will apply to all OTC derivatives offered to retail investors.

Image: Adobe Stock.

Do you have a confidential story, tip, or comment you’d like to share? Write to info@structuredretailproducts.com