October 24, 2007
Wealthy S’poreans can stomach risks
Barclays Wealth ranks them top in Asia in appetite for risky assets,
GENEVIEVE CUA reports
BARCLAYS Wealth has found that wealthy Singaporeans have the highest appetite for risk in Asia when it comes to their private investments.
What is more, they appear to take as much risk when running their private businesses. This bucks the global trend: people tend to take more risks in business than in their personal investments.
Working with the Economist Intelligence Unit, Barclays Wealth has published a wealth insights report on risk, return and reward. The report surveyed 790 individuals, 40 per cent of whom had investible assets of less than US$1 million. The rest had over US$1 million.
Barclays Wealth chief executive Didier von Daeniken said that the study should be viewed as a snapshot of risk attitudes at a certain point in time. The study was completed just before headlines broke on the sub-prime crisis. ‘If you had asked people (earlier this year) when business was doing well, property is well and so is equity, that would impact the way they answer questions.
‘We keep that in mind – in which environment did we ask the questions … It’s a strong reminder that we have to understand our clients, what they concentrate on, their businesses, families and where they are in the life cycle.’
Nearly half of the wealthy Singaporeans (42 per cent) surveyed said that they were willing to put their money into high risk investments to achieve a high return. This ranked them second in the global risk-taking table, ahead of investors in the US, Hong Kong and Switzerland.
Some 63 per cent of Singaporeans also reported that a high appetite for risk has been an influential factor in achieving the wealth they now hold.
Mr von Daeniken said: ‘Globally, the report reinforces the importance of the link between risk and wealth generation.’ On a global basis, 60 per cent of those with assets of more than US$1 million said that a high risk appetite was a big influence in wealth generation compared with 36 per cent of those with less than US$1 million of assets.
Wealthy Singaporeans are also among the most confident and
knowledgeable investors. When asked about their knowledge of funds and other collective investments, 53 per cent said they were confident, compared with 37 per cent in the US and 31 per cent in Spain.
But Singaporeans were less confident on hedge funds (only 2 per cent) and the debt market. They were also among the least confident in estate planning, tax and inheritance.
Mr von Daeniken said: ‘Our responsibility is to continuously remind clients that there is a risk return equation and they should diversify. No market goes up forever … Whether the investor listens or not, we say it again and again – be diversified and don’t take undue risks. The moment there is a serious correction, they will remember.’
Globally, three-fifths of respondents agree that having enough money to leave to the next generation is a key motivation to securing their wealth.
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