Affluent investors globally are significantly ramping up their exposure to alternative investments – with hedge funds increasingly in demand – and the trend looks set to continue, according to the findings of HSBC’s 2025 Affluent Investor Snapshot.
The annual survey, which polled 10,797 affluent investors across 12 global markets, found that allocations to alternative assets doubled year-on-year, driven by a growing desire for portfolio diversification and income generation. Notably, 20% of respondents plan to invest in hedge funds within the next 12 months, signalling a strong resurgence of interest in the strategy among high-net-worth individuals.
The broader category of alternatives – which includes private market funds, hedge funds, and multi-asset solutions – is experiencing rapid growth, particularly among younger investors. HSBC’s data shows that Gen Z and millennials have tripled their allocations to alternatives in the past year, reducing their historically high cash holdings from 31% to 17%.
According to the report, current ownership of alternatives sits at around 25%, but half of affluent investors plan to hold alternative assets within the next 12 months – effectively doubling market penetration. Hedge funds, in particular, are being viewed as key instruments for accessing asymmetric return profiles, managing volatility, and diversifying away from public markets.
The trend is underscored by a significant 40% reduction in cash allocations among the global affluent, as investors look to deploy idle capital in higher-yielding or non-correlated asset classes. This “cash to risk” rotation reflects growing confidence in alternative investments amid persistent macroeconomic uncertainty.
Private market funds are also drawing strong interest, with 29% of investors planning to add them to their portfolios, alongside continued enthusiasm for gold, which saw portfolio allocations more than double – from 5% to 11% – over the past year.
While the survey highlights a rising preference for digital channels such as social media to access market information, traditional financial advisors and family members remain the top sources of investment guidance. This underscores the growing need for wealth managers and hedge fund platforms to evolve their client engagement strategies, particularly for the next generation of affluent investors.
