High Net Worth (HNW) Offshore Investment - Drivers and Motivations 2021
Summary
This report draws on GlobalData’s Global Wealth Managers Survey and Financial Services Consumer Survey to analyze the drivers behind offshore investments across the wealth pyramid. It examines and contrasts offshore investment preferences across multiple jurisdictions and wealth tiers, providing readers with an in-depth understanding of what is motivating investors to look to offshore booking centers. The report outlines key challenges facing the wealth management industry in 2022, taking into account the impact of inflation, the COVID-19 pandemic, and what this means for the offshore sector.
The offshore wealth management market has surged in the wake of the COVID-19 pandemic, rebounding sharply after the volatility of Q1 2020. New investors have been drawn to the formerly niche market, while the traditional core of the market - HNW investors - have upped their allocations. The pandemic has truly reshaped the offshore investor profile and their behaviors, with the role of Asia Pacific growing as a destination for non-resident investors mainly based in North America and Europe.
Scope
- HNW investors remain the core segment of the offshore market due to the proportion of wealth they offshore, although the rate of offshore investing has increased across all wealth tiers.
- Younger, digital-savvy investors are increasingly turning to offshore investments as previous barriers - such as ease of use and high assets under management (AUM) thresholds - are overcome.
- COVID-19 travel bans have restricted the size of the expat market, although it remains a key segment of the offshore investor base due to their greater uptake of offshore accounts.
- Understand the growth sectors of the non-resident investor segment in recent years.
- Identify which offshore investors are gaining market share amid the pandemic.
- Gain insight into the drivers behind retail and HNW investor offshoring.
- Forecast HNW demand for offshore wealth management in all key markets.
- Size key market segments within the offshore investment market.
- Examine the effects of COVID-19 on the HNW offshore investment portfolio.
- Executive Summary
- Market overview
- Key findings
- Critical success factors
- HNW Offshore Investors
- The core HNW offshore segment is growing in most markets
- Table Figure 1: Most markets expect HNW investors to increase their offshore portfolio
- Table Top booking centers for select markets (where HNW investors are expected to offshore more AUM), 2021
- Table Figure 2: The HNW expat market is concentrated in the US and other Anglo markets
- Table Figure 3: Indian HNW expats are the single largest nationality in the expat market
- Portfolio preferences of HNW offshore investors
- Table Figure 4: Globally, HNW investors favor alternatives over any other asset class
- Table Figure 5: The equity portion of the offshore portfolio dropped considerably due to the pandemic
- The core HNW offshore segment is growing in most markets
- Retail Offshore Investors
- Retail offshore investors are mainly draw from developing market millennials
- Table Figure 6: Offshore investing increased in all regions barring the Middle East and Africa
- Table Figure 7: Offshore investment is a significant part of retail investors' portfolios in the Americas
- Table Figure 8: Older consumers increasingly turned offshore over the course of the pandemic
- While many individuals have offshore accounts, few outside of the HNW client base are worth pursuing
- Table Figure 9: Offshore investment is not common among investors outside of the private wealth market
- Table Figure 10: Unlike the onshore market, the small proportion of HNW investors dominate offshore AUM
- Table Figure 11: Expats and individuals returning home are a core component of the offshore market
- Retail offshore investors are mainly draw from developing market millennials
- Motivations and Drivers
- COVID-19 encouraged more investors to offshore wealth to combat negative portfolio impacts onshore
- HNW investors' business interests drive them to offshore
- Table Figure 12: The connected global economy underpins offshore wealth
- Retail investors are keen to offshore for better returns
- Table Figure 13: The expectation of better returns rose in importance globally in 2021 compared to 2020
- Table Figure 14: All regions continue to favor better returns over other offshore investment drivers
- Table Figure 15: 18-34-year-olds invest a larger proportion of their wealth offshore than any other age group
- Appendix
- Supplemental data
- Table Selected markets' rate of offshore investment among general population, 2020-21
- Abbreviations and acronyms
- Definitions
- Methodology
- Secondary sources
- Further reading
- Supplemental data
- About GlobalData
- Contact Us
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