A new global study suggests wealthier investors will turn their focus back to equity investments over the next year amid signs interest rates may fall, reducing the attractiveness of cash savings.

The study from HSBC’s new Affluent Investor Snapshot 2024 found that affluent investors globally currently allocate nearly one-third (32%) of their portfolios to cash.

However, those planning to rebalance their portfolios within the next year say they will invest 54% of this cash, on average, according to HSBC.

The bank says the trend is especially notable among Gen Z and Millennials, who plan to invest 61% and 56% of their cash, respectively, in equities.

Investors in mainland China, the UK and the US in particular will likely shift more of their cash into investments compared to other markets.

The Affluent Investor Snapshot also suggests that affluent investors are planning to diversify their portfolios further across asset classes, investment instruments and geographies.

Investors in India stand out for having the highest level of diversification globally, a highly active approach to investing and being the most likely to reassess their portfolios, HSBC said.

Despite affluent investors across the world demonstrating ‘home bias’ in their investments over one-third say they plan to increase their investments in international markets, with the United States and mainland China ranking as the top two destinations.

However, almost half of all investors say that uncertainty about market conditions and the complexity of maintaining a portfolio present hurdles to diversifying further.

Lavanya Chari, global head of investments and wealth solutions, HSBC Global Private Banking and Wealth, said, “It’s clear from this data that affluent investors increasingly recognise the importance of time in the market and not timing the market, as well as diversifying to build more resilient portfolios. As investors put their cash to work, they will look for actionable views and solutions that directly address their needs.  

The findings from the survey underscore differences in how Gen Z and Millennials approach their investments relative to older generations, HSBC says. The former are beginning their investment journey earlier and dedicating a higher proportion of their income (27%) towards investing versus Baby Boomers (22%).

HSBC’s Affluent Investor Snapshot also highlights a growing awareness and intent to own alternative investments as part of a diversified portfolio among Gen Z and Millennials. The younger generations exhibit a strong interest in adding private market funds and hedge funds to their portfolios over the next three years, the study showed.

As at the end of Q1 2024, HSBC’s wealth balances totalled US $1.8 trillion (£1.41bn), up 10% year-on-year.

• The Affluent Investor Snapshot 2024 is based on data from 11,230 individual investors across 11 markets. The full report is available here.