Equity strategies, particularly thematic equity funds, are gaining popularity among high-net-worth individual (HNWI) investors in Asia ex-Japan, according to the latest Cerulli Edge—Asian Monthly Product Trends.

Healthcare, technology, and environmental, social, and governance (ESG) themes are in the spotlight, as HNWIs become more comfortable allocating assets to funds that aim to capture the long-term growth of particular sectors or themes. Demand for these themes is expected to continue to hold up this year.

The ESG theme, while still nascent in much of Asia, has been gaining momentum across various markets. In China, for example, HNW investors are keen to allocate some proportions of their investments to ESG causes. India has seen a rising number of ESG fund launches, driven by interest from HNWIs and family offices.

In line with their clients’ interests, private banks have expressed interest in ESG products, as well as thematic equity strategies. Cerulli understands from its research interviews that private banks are also positive on Asian equity strategies, particularly those with a tilt toward value strategy, as well as China strategies, which continue to be a focus for most private bank clients.

Other strategies HNW investors are seeking include alternative investments for their higher returns and diversification. Asian markets, particularly Singapore and Hong Kong, saw a meaningful pick-up in private debt strategies, as well as real estate funds for regular income. HNWIs are also looking at unconstrained fixed-income strategies, as well as middle-market lending solutions that could still give them attractive yields. Cerulli’s research interviews show that some managers are investing more resources to offer alternative solutions, including retail-friendly real estate solutions for HNWIs and distressed funds, for the private banking segment.

Digital asset investments, including fund products that invest in digital assets, have also recently captured strong interest from HNWIs, which has pushed some banks and asset managers to build their cryptocurrency offerings.

“Aside from pitching fund products to fill private banks’ shelves, asset managers can explore subadvisory partnerships with private banks that hope to launch their own range of investment strategies for their clients,” said Shannen Wong, senior analyst with Cerulli. “In addition, since most family offices transact through the private bank channel, asset managers can work with private banks to offer asset management and portfolio construction to family offices in the region.”