HSBC Survey Finds Growing Appetite for Alternative Assets — Gold Leads the Surge

A recent HSBC survey highlights a marked shift among affluent investors toward alternative assets, with gold emerging as the most prominent beneficiary of that trend. According to the survey, more than half of respondents intend to increase their exposure to alternatives such as private market funds and hedge funds within the next 12 months, effectively doubling their current allocation to these strategies.

Key Findings from the Survey

• Over 50% of surveyed investors plan to increase allocations to alternative assets in the coming year, signaling strong demand for non-traditional investments.
• Gold recorded the largest increase in portfolio allocation of any asset class in the survey: allocations rose from an average of 5% to 11%.
• Nearly half of investors say they plan to add gold to their portfolios in the next 12 months, reflecting renewed interest in precious metals.
• Physical gold remains a preferred safe-haven asset, particularly in times of market uncertainty, while younger investors show disproportionate interest in digital forms of gold ownership.
• Cash holdings have fallen sharply among Gen Z and Millennial investors as they reallocate capital toward assets perceived to offer greater long-term resilience and growth potential.

Why Gold Is Taking Center Stage

Investors often turn to gold during periods of economic uncertainty because it can preserve purchasing power and act as a portfolio diversifier. The survey’s finding that allocations to gold more than doubled suggests many affluent investors are repositioning their portfolios to hedge against volatility, inflation, or geopolitical concerns. Physical gold—bullion and coins—continues to appeal to those seeking tangible, low-counterparty-risk assets.

At the same time, the rise of digital gold products has attracted younger investors who prefer the convenience and liquidity of electronic ownership. Digital gold can provide exposure without the storage and insurance considerations associated with physical metal, although it may introduce different custodial and counterparty risks that investors should understand.

Alternatives Beyond Gold

Alongside the surge in gold allocations, the broader move into alternative assets reflects a desire for diversified return streams that are less correlated with traditional equities and bonds. Alternatives mentioned in the survey—such as private market funds and hedge funds—promise access to strategies and markets that can deliver uncorrelated income, private-equity-style returns, or downside protection when public markets falter.

While alternatives can offer attractive benefits, they also often involve longer lock-up periods, higher fees, and different liquidity profiles than publicly traded securities. Investors considering increased exposure should weigh these trade-offs carefully and assess suitability within the context of their overall financial goals and risk tolerance.

Generational Differences in Allocation and Preference

The survey highlights a clear generational divide. Gen Z and Millennial investors have reduced cash allocations significantly compared with older cohorts, shifting toward assets they believe will provide resilience and growth over the long term. This younger demographic is more open to digital asset formats, including digital representations of gold, and may prioritize technology-enabled solutions that offer fractional ownership and easier access.

Older investors, on the other hand, appear to maintain a stronger preference for physical safe-haven assets and may adopt a more conservative reallocation approach. Financial advisors and wealth managers will need to tailor their guidance to reflect these differing priorities and behavioral tendencies across age groups.

Practical Considerations for Investors

• Assess portfolio diversification: Use alternatives and precious metals to complement, not replace, core holdings.
• Understand liquidity: Alternatives and physical gold have different liquidity characteristics—plan around potential lock-ups and redemption constraints.
• Consider costs and custody: Fees, storage, and custodial arrangements differ greatly between physical and digital gold, and among various alternative investments.
• Match investments to objectives: Align allocation shifts with long-term goals, timeline, and risk tolerance rather than short-term market noise.
• Seek professional advice: Because alternative strategies vary in complexity, consult a qualified advisor to ensure proper due diligence and portfolio integration.

Conclusion

The HSBC survey points to a clear reallocation trend among affluent investors: a stronger appetite for alternative assets, led by a pronounced move into gold. Whether through physical bullion or digital formats, gold’s growing role in portfolios reflects a search for stability and diversification. At the same time, rising interest in private market funds and hedge funds indicates a broader willingness to explore non-traditional avenues for return and risk management. Investors should carefully evaluate the implications of these shifts—balancing potential benefits against liquidity, cost, and suitability—while advisors adapt strategies to meet evolving client preferences across generations.