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 of stubborn inflation spur diversification.
From Asian billionaires to global family offices, alternative investments are becoming a larger part of portfolios once dominated by traditional assets, industry observers say.
JPMorgan Asset Management’s alternative private wealth management assets in Asia Pacific have surged 40% in the past 12 months, according to Dan Watkins, the firm’s regional managing director, highlighting the growing appetite of high-net-worth and ultra-high-net-worth clients.
“So you really have a huge appetite for alternative exposure in this ultra-high-net-worth and high-net-worth category,” Watkins said recently at a media summit in Singapore.
The shift comes as investors face increasingly concentrated stock markets, geopolitical uncertainty and concerns that stocks and bonds no longer provide the same protection against market downturns as they once did, experts say.
“We’re seeing a big increase in planned asset allocation to alternatives among the family offices we’re talking to,” said John Woods, chief investment officer for Asia at Lombard Odier.
Alternative investments now represent 60% of single-family office portfolios, surpassing traditional assets for the first time, according to BNY Wealth. Traditional assets made up 41% of allocations, according to the report.
Wealthy investors are seeking diversification, income and access to investments outside of listed markets, and concerns about high valuations, tight credit spreads and the growing correlation between stocks and bonds have accelerated this trend, Woods added.
The appeal of hedge funds
Hedge funds are emerging as a favored option for wealthy investors seeking protection against market fluctuations, especially as traditional diversification strategies face increasing challenges.
Olaolu Aganga, head of portfolio construction and analysis at Citi Wealth, said hedge funds have recently attracted the strongest interest among qualified clients, who are looking for returns less dependent on the direction of equity markets.
Private credit is another area attracting 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, Woods said.
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 looking for investments that can generate income and help preserve purchasing power amid persistent inflation and interest rate uncertainty, while diversifying their portfolios to avoid market volatility, according to Aganga.
However, Citi’s survey also showed that public stocks saw the largest net increase in allocations, suggesting that wealthy investors are adding alternatives rather than abandoning traditional markets. “This is not a massive turnover in public markets,” Woods said.
Infrastructure demand
Infrastructure has become another big beneficiary of this transition, with the boom in artificial intelligence creating huge demand for data centers, power grids and digital connectivity.
Thomas Roland Guyot, head of private markets investments 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 evident in fund flows. Net inflows into open-ended infrastructure funds rose 30% year-on-year in the 12 months to the first quarter of 2026, according to PitchBook data cited by UBS.
Private equity remains the cornerstone of wealthy investors’ alternative portfolios, even as they become increasingly selective. Family offices are increasingly favoring direct investments in companies, co-investments alongside private equity managers and purchasing stakes in existing funds in the secondary market, rather than relying solely on traditional mutual funds, according to Citi Wealth’s Aganga.
Such approaches can give investors greater control over their investments or opportunities to acquire assets at a discount, Lombard Odier’s Woods said.
This 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 in alternative assets is not without risks, although mitigating them boosts flows.
Private investments can lock in capital for years, while valuations may be slow to reflect deteriorating market conditions. Even funds marketed as semi-liquid may restrict withdrawals when redemption requests increase.
“Better access does not equal liquidity,” said JPMorgan’s Watkins.
Citi’s Aganga also cautioned that performance can vary widely 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 can appear diversified while remaining heavily exposed to the same AI investment cycle, said UBS’s Guyot.
For now, the flow of capital into alternative assets shows their growing appeal among the wealthy, but not at the expense of traditional investing, with Woods emphasizing that much of the new investment is being funded by fresh capital and excess cash rather than large-scale sales of stocks and bonds.
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