The world’s wealthiest investors are increasingly looking beyond stocks and bonds, pouring money into hedge funds, private equity and infrastructure assets, as market volatility and fears about stubborn inflation spur diversification.
From Asian billionaires to global family offices, alternative investments are becoming a bigger part of portfolios once dominated by traditional assets, said industry watchers
JPMorgan Asset Management’s private wealth alternative assets in Asia-Pacific surged 40% over the past 12 months, according to Dan Watkins, the firm’s regional chief executive officer, underscoring the growing appetite among high-net-worth and ultra-high-net-worth clients.
“So you really have this huge appetite for alternative exposure happening in that ultra-high-net-worth, high-net-worth category,” Watkins said recently at a media summit in Singapore.
The shift comes as investors grapple with increasingly concentrated equity markets, geopolitical uncertainty and concerns that stocks and bonds may not provide the same protection against market downturns as they once did, experts said.
“We are seeing a sharp increase in planned asset allocation to alternatives among the family offices we speak to,” said John Woods, chief investment officer for Asia at Lombard Odier.
Alternative investments now account for 60% of single-family office portfolios, surpassing traditional assets for the first time, according to BNY Wealth. Traditional assets accounted for 41% of allocations, the report found.
Wealthy investors are seeking diversification, income and access to investments outside listed markets, and concerns over elevated valuations, tight credit spreads and the growing correlation between stocks and bonds have accelerated the trend, Woods added.
Hedge funds’ allure
Hedge funds are emerging as a favored option among wealthy investors seeking protection against market swings, particularly as traditional diversification strategies face growing challenges.
Olaolu Aganga, head of portfolio construction and analytics at Citi Wealth, said hedge funds have attracted the strongest recent interest among qualified clients, who are seeking returns less dependent on the direction of equity markets.
Private credit is another area drawing interest, offering investors contractual income streams, while some hedge fund strategies seek to profit from differences in performance between companies rather than relying on broad market rallies, said Woods.
Citi’s 2026 survey of 351 family offices found that inflation was their biggest concern, followed by interest rates, financial system stability and market volatility.
Wealthy families are increasingly seeking investments that can generate income and help preserve purchasing power amid persistent inflation and interest-rate uncertainty, while diversifying portfolios against market volatility, according to Aganga.
The Citi survey, however, also showed public equities recorded the strongest net increase in allocations, suggesting wealthy investors are adding alternatives rather than abandoning traditional markets. “This is not a wholesale rotation away from public markets,” Woods said.
Infrastructure demand
Infrastructure has emerged as another major beneficiary of the shift, with the artificial intelligence boom creating enormous demand for data centers, electricity networks and digital connectivity.
Thomas Roland Guyot, head of private markets investment specialists for Southeast Asia at UBS Unified Global Alternatives, said investors are increasingly targeting assets that support AI, electrification and energy security.
Such investments potentially offer a combination of long-term growth and relatively predictable cash flows, particularly where revenues are supported by essential demand or long-term contracts.
Investor appetite is already showing up in fund flows. Net inflows into open-ended infrastructure funds rose 30% year on year in the 12 months through the first quarter of 2026, according to PitchBook data cited by UBS.
Private equity remains a cornerstone of wealthy investors’ alternative portfolios, although they are becoming more selective. Family offices are increasingly favoring direct investments in companies, co-investments alongside private equity managers and purchases of existing fund stakes on the secondary market, rather than relying solely on traditional pooled funds, according to Citi Wealth’s Aganga.
Such approaches can give investors greater control over their investments or opportunities to acquire assets at discounts, said Lombard Odier’s Woods.
The broader shift is also being facilitated by the growth of evergreen and semi-liquid funds, which have lowered minimum investment thresholds and reduced some administrative hurdles associated with traditional private-market funds, Woods added.
Risk factors
Investing into alternative assets does not come without risks, even as mitigating those is driving flows.
Private investments can lock up capital for years, while valuations may be slow to reflect deteriorating market conditions. Even funds marketed as semi-liquid can restrict withdrawals when redemption requests surge.
“Improved access does not equal liquidity,” JPMorgan’s Watkins said.
Citi’s Aganga also warned that performance can vary significantly between managers, while private assets may appear less volatile than they actually are because valuations are updated less frequently.
Investors must also guard against unintended concentration. A portfolio holding data centers through real estate, infrastructure and private equity funds may appear diversified while remaining heavily exposed to the same AI investment cycle, UBS’ Guyot said.
For now, the flow of capital into alternative assets shows their increasing appeal among the rich, though not at the expense of traditional investment, with Woods pointing out that much of the new investment is being funded by fresh capital and excess cash rather than large-scale sales of stocks and bonds.
