HNWIs directly investing into funds

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By Shan Saeed

Sophisticated investors are using various investment strategies to park their funds and to raise them as well. I can share my perspective while sitting in Asia Pacific region and based in Kuala Lumpur, the Asian investors are very aggressive in their investment outlook.
I read a very informative piece in Wall Street Journal dated Dec 11, 2016, about how Asian family office and investors are investing their funds. According to the writer, Steinberg in WSJ elaborated: To help manage their investments, increasing numbers of the richest families around the world are turning to so-called family offices, private firms that manage everything from investments to tax and estate planning and philanthropy. They are typically using more aggressive investment strategies than Western family offices and want more direct involvement in the businesses they invest in.

The Market Deals Insights: Direct Investment
A recent report from UBS Group AG and Campden Wealth points to data highlighting differences. Asia-Pacific family offices in 2016 have allocated 38% of their investment portfolios to direct venture-capital and private-equity deals, co-investing and real estate direct investment. North American family offices, by contrast, have allocated 27% to those investments.
Private-equity funds are often a popular choice among the global wealthy, for example, Asian families tend to invest in them less because they are limited to a passive role. Asia-Pacific family offices, on average, invested just 3% of their portfolio in private-equity funds in 2016, according to the UBS and Campden Wealth report, compared with 8% by North American family offices.

Graphical Representation of Facts
Asia-Pacific families are more hands-on than their Western counterparts. They are increasingly doing direct investments, which allow family offices to take a stake in a company or purchase commercial real estate outright. Asian families are more interested in spending their own money to make investments that may overlap with their own business. Sometimes, they also want to have a say in how the company is run. Cash Flows and future returns have become more important than ever in the eyes of smart investors.

Commercial Real Estate and Education: Long-term Growth
Asian families and businesses are investing and raising funds for education/ commercial real estate. This has become the new obsession for many investors in Asia. Premise: long growth and returns are very secure and solid.
New Epoch of Investment Landscape: Asia is The Future Growth Area
Asia investors would drive the financial market in the next 5-10 years. Most of the wealth will be created by wealthy Asian families and their generation. The pivot has moved to East and China has become the new global and economic power.

About the author
Shan Saeed is Chief Economist at IQI Global, one of the top brokerage houses, advising clients in Kuala Lumpur, Singapore, London, Melbourne, Dubai, Penang, Makati, HCMC, Manama and Toronto. Shan can be reached at shan.saeed@iqi-group.com