HNWs see appeal of ETFs for capital growth
ETF usage by high-net-worth (HNW) investors is on the rise, with allocations rising by a third in the past year.
The wealth manager’s LGT Wealth Management State of Wealth 2025 report surveyed over 1,100 HNW and ultra-HNW individuals on their asset allocation decisions.
Exposure to ETFs among this demographic increased by one third over the past year, standing at 7 per cent, the report found. The most-common reasons for holding ETFs were achieving a balance of capital growth, managing risk and maximising capital growth.
ETF usage was smaller among ultra-HNWs than HNWs, held by just 5 per cent of those in the wealthier demographic.
Meanwhile, HNWs intend to keep increasing their exposure to the asset, with ETFs standing second only to direct Australian shares for future trades over the next year.
Total ETF inflows during October stood at $5.9 billion which was a new record for the industry to bring total funds under management to $321 billion.
Fund managers have been taking this trend into consideration with numerous ETF launches having taken place in recent weeks. This includes active ETFs from property manager Quay Global Investors, an equity active ETF from TenCap and a Bitcoin ETF from BlackRock.
Looking at asset allocation trends beyond ETFs, LGT said directly-held equities were the dominant core holding with 35 per cent of HNW portfolios being exposed to the asset, up from 30 per cent in 2024. But it varied by demographic with HNW investors significantly increasing their exposure while UHNW ones held significantly lower exposure than their HNW counterparts at 22 per cent and 29 per cent respectively.
Exposure to property fell, especially for advised clients where it dropped from 32 per cent to 25 per cent.
LGT commented: “Across all asset classes, significant growth was seen in exposure to alternatives (private markets, infrastructure, and the increasingly mainstream cryptocurrency), which doubled to around 10 per cent across all HNW, and exposure to ETFs, which increased by around one third – to 7 per cent. UHNW investors exhibited an even higher appetite for alternatives, with exposures closer to 17 per cent.”
AUTHOR
Laura Dew
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