The world’s wealthiest investors are increasingly pouring money beyond stocks and bonds into hedge funds, private equity and infrastructure assets, as concerns about market volatility and stubborn inflation prompt diversification.
From Asian billionaires to global family offices, alternative investments are becoming a bigger part of portfolios that were once dominated by traditional assets, industry watchers say.
JPMorgan Asset Management’s private wealth alternative assets in Asia-Pacific have grown 40% in the past 12 months, highlighting growing demand among high-net-worth and ultra-high-net-worth clients, said Dan Watkins, the firm’s regional chief executive officer.
“So there’s really a huge appetite for alternative exposure that’s happening in the ultra-high-net-worth and high-net-worth categories,” Watkins said at a recent media summit in Singapore.
Experts say the shift comes as investors face an increasingly concentrated stock market, geopolitical uncertainty and concerns that stocks and bonds may no longer offer as much protection against market downturns as they once did.
“Among the family offices we talk to, we’re seeing an uptick in alternative asset allocation plans,” said John Woods, Asia chief investment officer 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 the allocation, according to the report.
Wealthy investors are seeking diversification, income and access to investments outside of public markets, and concerns about rising valuations, tighter credit spreads and increasing correlation between stocks and bonds are fueling that trend, Woods added.
The charm of hedge funds
Hedge funds have emerged as a preferred option among wealthy investors seeking protection from market fluctuations, especially as traditional diversification strategies face increasing challenges.
Olaolu Aganga, head of portfolio construction and analysis at City Wealth, said hedge funds have recently seen the strongest interest among qualified clients seeking returns that are less dependent on the direction of the stock market.
Mr. Woods said private credit, which provides investors with a contractual income stream, is also an area of interest, but some hedge fund strategies seek to profit from differences in performance between companies rather than relying on broader market gains.
A 2026 Citi survey of 351 family offices found that inflation was the top concern, followed by interest rates, financial system stability and market volatility.
Aganga said wealthy households are increasingly seeking investments that can help them generate income and maintain purchasing power amid persistent inflation and interest rate uncertainty, while diversifying their portfolios against market volatility.
However, Citi’s research also showed that public equities had the largest net allocation increase, suggesting that wealthy investors are adding alternatives rather than abandoning traditional markets. “This is not a massive rotation out of the public markets,” Woods said.
infrastructure demand
Infrastructure is also emerging as a big beneficiary of this change, with the artificial intelligence boom creating huge demand for data centres, power grids and digital connectivity.
Investors are increasingly targeting assets that support AI, electrification and energy security, said Thomas Roland Guyot, head of Southeast Asia private markets investment specialist at UBS Unified Global Alternatives.
Such investments can offer a combination of long-term growth and relatively predictable cash flows, especially if returns are supported by essential demand or long-term contracts.
Investor appetite is already showing up in capital flows. Net inflows into open-end 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 a cornerstone of alternative portfolios, although it has become more selective for wealthy investors. Rather than relying solely on traditional pooled funds, family offices are increasingly favoring investing directly in companies, co-investing with private equity managers, and buying existing fund shares in the secondary market, according to City Wealth’s Aganga.
Lombard Odier’s Woods said such an approach could give investors more control over their investments or the opportunity to acquire assets at a discount.
Woods added that a broader transition is also being facilitated by the growth of evergreen and semi-liquid funds, which have lowered minimum investment standards and alleviated some of the administrative hurdles associated with traditional private market funds.
risk factors
Investing in alternative assets is not without risk, but mitigating risk encourages flow.
Private investments can lock up capital for years, while valuations can slow to reflect deteriorating market conditions. Even for funds marketed as semi-liquid, withdrawals may be restricted if redemption requests spike.
“Improving access does not equate to liquidity,” said JPMorgan’s Watkins.
Citi’s Aganga also cautioned that while performance can vary widely between managers, infrequent valuation updates can make private assets appear less volatile than they actually are.
Investors also need to guard against unintended concentrations. UBS’s Guyot said portfolios that own data centers through real estate, infrastructure and private equity funds may appear more diversified while remaining largely exposed to the same AI investment cycles.
So far, the flow of capital into alternative assets, while not at the expense of traditional investments, shows their growing appeal among wealthy individuals, with Woods pointing out that many new investments are being funded by fresh capital or surplus cash rather than large-scale sales of stocks or bonds.
