Income investing is a key priority for a majority (89%) of Asian investors, but they do not commonly use non-traditional investments.
Instead, equity income products are preferred by investors in China (76%), Taiwan (62%) and Hong Kong (35%), according to the survey, which canvassed 1150 affluent investors across Singapore, Hong Kong, China and Taiwan.
Most Singapore investors use guaranteed income products (46%).
Asian investors allocated an average of 25% of their assets to equities and an average of 27.5% to cash or cash equivalents, according to the survey. Investors hold an average of 6.7% of their portfolio in non-traditional investments compared to 8.2% last year.
“Income remains central for many Asian investors."
“Income remains central for many Asian investors, however, they are too focused on familiar income-producing asset classes,” said Lennie Lim, managing director and regional head for Asia.
“Investors should explore more investment options, and develop a diversified investment strategy which would help them increase income, and in the meantime mitigate risk and volatility.”
Income-seeking investors should build a balanced portfolio given the ongoing volatility in China and the looming US interest rate hike, which could lead to more volatility in the region.
The firm believes that less traditional asset classes such as unconstrained instruments and managed volatility investment products could be attractive to high-net-worth investors in the region.
But Asian investors polled for the survey did not show interest in increasing allocation to these non-traditional products. Only 26.7% of Asian investors plan to increase exposure to non-traditional investments, which is a 5.8% drop from last year.
Diversification will not guarantee profit or protect against loss, but a diversified portfolio could offer “customised trade-offs between volatility and income benefits”, Lim added.
Investors in China, Hong Kong, Taiwan and Singapore with minimum $200,000 in investable assets were polled for the survey.