Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 413

How are high net worths investing and thinking now?

The pathways to wealth are many and varied. For one person it may come from manufacturing, for another it may be entrepreneurial flair, while for another it may come from working the land.

A common misconception is that people that have achieved significant wealth are automatically good at managing it and understanding the investment opportunities available to both protect and grow that wealth. The reality is while someone may be very clever in their area of expertise, most of us cannot be experts across multiple disciplines.

Investing has become more difficult

Since the GFC of 2008-09, there has been a series of events that have made investing more problematic, including:

  • The descent into an extended low interest rate environment, making some of the more common investment products like savings accounts and term deposits less attractive.
  • Less stable global environment, driven by a retreat from globalisation and the rise of nationalist interests and leading to real and threatened trade wars.
  • Increased digital disruption creating both rapid transformation and disruption in many industries, making equity investments more difficult to formulate.
  • ‘Black swan’ events like COVID-19 have made forward forecasting particularly difficult, even impacting resilient markets like property.
  • Lack of knowledge of investment alternatives outside of the big three – cash, shares and property.

The last point showed up clearly in research undertaken this year by Citi, with over half of wealthier investors citing lack of knowledge as the greatest impediment to examining other investment opportunities.

How do Australia's HNW investors feel about investing?

Outlook gives investors optimism

However, investors are also eager to take advantage of what they perceive as improving economic conditions. The research showed wealthier investors are 2.5 times more optimistic about the outlook this year compared to lockdown riddled 2020.

How do Australia's HNW investors feel about today's economic outlook?

COVID-19 remains the main concern to the outlook, followed by trade wars. Low interest rates are a major concern for less than one-third of surveyed investors.

That is likely because many wealthier investors are also approaching or in retirement and are more concerned with preserving wealth than high growth strategies. For that reason, they can build portfolios that carry less risk but still provide an acceptable return.

Diversification remains an elusive goal

The research shows wealthier investors are still struggling to embrace portfolio diversity, with 54% only holding domestic shares in their portfolio. It’s likely increased education on the benefits of diversity both by asset class and geography would see this concentration reduced. Citi’s clients tend to favour greater exploration of investment opportunities available, with 57% taking some form of international investment by the end of the first quarter of 2021.

Where do Australia's HNW investors choose to invest?

Investment areas of interest

Two areas that wealthier investors are showing particular interest in is healthcare and property.

Australian healthcare stocks, which include some leading global companies, have underperformed the ASX200, by 30% over the past 12 months. It is not a phenomenon restricted to Australia. In the United States the price of healthcare stocks, based on forward earnings estimates, trade at a 30% discount to the S&P500 index.

This is an real opportunity to gain an exposure to one of the few sectors remaining that we do not consider expensive following 15 months of stocks rising since markets started pricing in a COVID-19 recovery.

In property, we expect buying strength to remain robust for the remainder of the year with price growth exceeding 10% for the year. However, we view increasing issues with affordability to temper growth next year, with growth contained below 4%.

Despite outbreaks of the pandemic continuing to impact many parts of the world we are solidly in a global recovery phase. It aligns us with investors optimism going forward, but we remain cautious that volatility has been a consistent driver of markets over the past decade and will likely remain a significant element in portfolio construction for the foreseeable future.

 

Gofran Chowdhury is Head of Investment Specialists at Citi Australia, a sponsor of Firstlinks. Information contained in this article is general in nature and does not take into account your personal situation.

For other articles by Citi, see here.

 

13 Comments
Lisa
June 30, 2021

It's encouraging to see HNW investors are ready to embrace diversification, which has seen me through these difficult times since 2008. It certainly has taken a long time for the local stock market to regain values it had before the GFC. Without the addition of bonds, property and cash, the average shares investor would have waited a long time for improvements.

Kelvin Russell
June 27, 2021

We should note that COVID-19 and it's market effects are not "Black Swan" events. Nassim Nicholas Taleb, who wrote the book "The Black Swan", has specifically stated this. The timing and severity of COVID-19 was not predictable, but the market fluctuations are part of the normal volatility that forecasting takes into account.

Ruth
June 30, 2021

Yes Kelvin, Taleb says the disease is not a black swan event. But what was for me was the cover-up. For decades there has been understanding between nation states to promptly report disease so it can be contained. Unless that disease is a bio-weapon. But I suppose use of a bio-weapon is something that's not unforeseeable either. I like his books.

Graham Hand
June 26, 2021

High Net Worths in this survey are defined as: “A minimum of 250k investable assets excluding property, or personal income above 250k for at least 2 years, or total assets, including equity in property, of $2.5m”

Abraham Robertson
June 26, 2021

Great article Gofran - very interesting insights. When we surveyed our client base (wholesale investors only) in May we found sentiment shifting from bullish to bearish in terms of equities, and we have noticed a swing in demand towards products I'd classify as "risk-off". While our clients are positive about the future, the short term outlook for equity markets was that we are at the pointy end. Did you conduct any sentiment analysis in your survey that you could share?

Peter
June 23, 2021

What is the definition of a High Net Worth investor?

Jason
June 23, 2021

HNW investor is normally from the $10m mark.

Niki
June 30, 2021

Over 10 million each person
Lower is
Comfortable living

Sparty
June 30, 2021

"From a sample of 1000 high-net-worth (HNW) individuals – defined as those having a minimum of $1 million in investable assets – and ultra-high-net-worth (UHNW) individuals, with at least $10 million in investable assets –" https://www.afr.com/companies/financial-services/australian-investors-lack-sophistication-20190724-p52a5p Jul 24, 2019

Humphrey
June 23, 2021

Dear Noel Thank you for your very informative article. Humphrey

William Clarke
June 23, 2021

I am amazed that Corporate Bonds are not included. I have 50% of my portfolio in bonds, 15% in US stocks and the balance in the ASX.
Regards
William

CC
June 23, 2021

corporate bonds. watch out when interest rates rise...

Warren Bird
June 30, 2021

Good on you William! I don't have as much as 50%, but that's purely a personal asset allocation thing. I certainly have them though - all my fixed interest is in diversified, well managed corporate and high yield bond funds. As for CC's concern to 'watch out when interest rates rise', I can only refer to my several articles about this subject, in which I argue that rising yields result in higher returns beyond the very short term. I would make the additional note that even in the short term corporate bond funds have less to be concerned about because they tend to be shorter duration than broader bond funds that have longer term government securities in them.

 

Leave a Comment:

RELATED ARTICLES

Wealth doesn’t equal wisdom for 'sophisticated' investors

Is more trouble coming for the 60/40 portfolio?

Passive investing has risks too

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Latest Updates

Investment strategies

Finding income in an income-starved world

With term deposit rates falling, bonds holding up but with risks attached, and stocks yielding comparatively paltry sums, finding decent income is becoming harder. Here’s a guide to the best places to hunt for yield.

Economy

Fearful politicians put finances at risk

A tearful Treasury chief, a backbench rebellion, and crashing bonds. What just happened in the UK and why could Australia’s NDIS be headed for the same brutal fiscal reality?

Shares

Investing at market peaks: The surprising truth

Many investors are hesitant to buy into a market that feels like it’s already climbed too far, too fast. But what does nearly a century of market history suggest about investing at peaks?

Shares

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

Investment strategies

Will stablecoins change the way we pay for things?

Stablecoins have been hyped as a gamechanger for the payments industry. But while they could find success in certain niches, a broader upheaval of Visa and Mastercard's payments dominance looks unlikely.

Infrastructure

An investing theme you can bet on for the next 30 years

Investors view infrastructure as a defensive asset class rather than one with compelling growth prospects. These five tailwinds for demand over the coming decades suggest that such a stance could be mistaken.

Investment strategies

A letter to my younger self: investing through today's chaos

We are trading through one of history's most confounding market environments. One day, financial headlines warn of doomsday scenarios. The next, they celebrate a new golden age. How can investors keep a clear head?

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.