What are the ultra-wealthy investing in?

The Spotlight

1 minute read

Jul 12, 2020

top private banks are advising their wealthy customers to shift their portfolio allocation

The top private banks are advising their wealthy customers to shift their portfolio allocation.

Since the coronavirus sell-off, the top private banks have been gradually shifting their portfolio allocation for the wealthiest 1%, and one of the big winners of this new allocation is gold.

Even though the stock market is bouncing back from the sell-off, the spread of COVID-19 drastically slowed the global economy, which led to doubts about the strength of the underlying economy.

Besides, most bond yields are flirting with negative returns, turning gold and other non-yielding assets into serious competitors for capital allocation.

Therefore, private bankers are advising their clients to increase their exposure to the yellow metal in this post-COVID financial world. UBS, the world’s biggest wealth manager, forecasted that gold would hit $1,800 by year-end as their most likely scenario [Editor's note: gold was even closer to $1900 at the end of December 2020].

The ultra-wealthy see the endgame of capital allocation with a different lens, as explained by Lisa Shalett, Chief Investment Officer, Wealth Management at Morgan Stanley: "[They are] very concerned about wealth preservation. And in many ways, they have a longer historic lens than some of our other clients, so they do worry about inflation."

As most portfolios used to lack precious metals, this shift towards gold is a real game-changer in the world of private banking and wealth management.

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