China has changed from the "enterprise going global era" to the "personal global configuration era". According to the Hurun Wealth Report, by 22, there will be 3.46 million households in China with investable assets greater than RMB 6 million, and their investable financial assets will account for half of China's overall personal wealth. At the same time, more high-net-worth individuals have paid attention to the trend of the times and started to embrace the era of global asset allocation.

what kind of people need global asset allocation?

families with investment ability and investment demand can allocate part of their assets globally. From the perspective of investment, most of China people's assets and risks are concentrated in RMB, so it is an effective means to spread some funds in non-RMB assets.

before making capital investment (including primary market private equity, secondary market stocks, bonds, hedge funds, etc.), investors should meet the following conditions:

1) There is sufficient cash flow. After deducting the necessary household consumption every month, there is a relatively stable balance.

2) the net assets are positive. Have sufficient savings, and have certain ability to resist risks in case of unexpected accidents (such as being laid off by the company).

why global asset allocation?

as early as 196s, Harry Markowitz put forward "Modern Portfolio Theory", telling rational investors that they should optimize their portfolios by diversifying their investments. He once analyzed the historical return data of stock markets in 11 countries, and concluded that international diversified investment can optimize the return of portfolio. Later, he won the Nobel Prize in Economics.

Modern modern portfolio theory:

According to this theory, a portfolio can reduce unsystematic risks, and a portfolio is determined by its constituent securities and their weights. Choosing irrelevant securities should be the goal of building a portfolio. On the basis of traditional return on investment, it puts forward the concept of risk for the first time, and thinks that risk, not return, is the focus of the whole investment process, and puts forward the optimization method of investment portfolio.

global asset allocation is superior to single country market allocation, which has been confirmed by numerous academic studies and industry practices.

from the beginning of 1991 to the end of 217, the average annualized rate of return of the composite stock index of China and Shanghai Stock Exchange is 14.2%. If we only look at the average annualized rate of return, the stock market in China is not bad.

however, it is worth noting that the volatility of China stock market is as high as 55.67%, which is only 14.3% compared with the relatively more mature S&P index of the United States. Moreover, the largest retracement of the Shanghai Composite Index in the past 26 years is as high as -75.42%. ?

If investors put all their funds into the China stock market, they should be prepared with a strong heart. Although the China stock market has the opportunity to benefit from China's relatively strong economic growth, investing in a single market, especially in a single emerging market, will still expose investors to considerable risks.

if investors happen to buy stocks at a high level, for example, a few months before the bursting of the stock market bubble in 27, all the stock assets they hold will shrink by 75% in the next year. It fell back to the level around 2 in one year. As can be seen from the figure below, from the lowest point of that retracement to just past 217, after 1 years of adjustment, the Shanghai Composite Index has not yet returned to its original level.

This example is to show that the volatility of a single market is high. What if investors allocate part of their assets to the US stock market or the developed countries' markets?

if investors invest half of their assets in China stocks and spare the other half for the S&P index of the United States, our annualized average income will not decrease, but increase slightly (14.92%). And our volatility has been greatly reduced to 29.43%. The maximum retreat has also been reduced.

Therefore, the reasons for global asset allocation are summarized as follows:

1) Market efficiency principle

Diversification in multiple markets as far as possible can reduce investment risks while maintaining investment returns.

2) The market is difficult to predict

It is difficult for investors to accurately predict which country and which asset type will have better investment returns in the next few years (such as 1 years).

Global asset allocation is mainly to spread risks and put eggs in different baskets to get a relatively low-risk return on investment.

what are the benefits of global asset allocation?

First, meet the structural transformation needs of domestic high-net-worth individuals

Compared with developed countries, industry experts have summarized four characteristics of China's household asset allocation:

First, in the overall allocation, the proportion of real estate is too large, and the proportion of financial assets is low, for example, American household real estate accounts for 27%, China households account for 68%, and Beijing and Shanghai account for 85%;

In financial assets, savings account for a relatively high proportion, while foreign families only account for less than 5%; ?

Third, the overall awareness of insurance is not strong. Although it has improved in recent years, it still relies more on social security than commercial insurance supplemented by family allocation. ?

Finally, there is a lack of professional knowledge about complex financial products, and there are many contacts with stocks and related products.

According to the data released by Zhiyan Consulting, as of 217, individuals can invest 142 trillion yuan in financial assets, with an average annual growth rate of 2% from 27 to 217. The number of high-net-worth individuals has increased from 39, to 2.44 million, and their investable assets have increased from 11 trillion yuan to 63 trillion yuan. There are more and more high-net-worth people, and at the same time, they are increasingly pursuing scientific and rational asset allocation. They no longer worry about the increasingly strict supervision of the domestic real estate market, but turn to pursue a more free and mature overseas market.

Second, seek higher stability and relatively high rate of return

Most investors must still be impressed by the economic crisis in 28, and many countries' property markets and stock markets have been tied together and plunged. Once the financial crisis appears, it can not be easily reversed, but it can avoid single market risk through global asset allocation.

Third, there are trading needs and other needs

The growing high-net-worth customers are not completely constrained by the Nuggets, and some have set their sights on the national market. For them, global asset allocation may be a natural choice. In addition, for some needs such as going abroad, studying abroad and emigrating, national asset allocation is very necessary.

according to the latest statistics, the global overseas investment in personal financial assets (cross-border+offshore) accounts for more than 2% of the total investable financial assets for high-net-worth users in many countries and regions, but only 4.8% in China. This means that the average high net worth individuals in China only invest less than 5% of their total assets overseas, which is far from the international level.

Therefore, compared with the developed countries, China still has a lot of room for development.

It is not enough to allocate several baskets of eggs. In case of turmoil, all these baskets will be honored and lost, so it is necessary to allocate several baskets and eggs to the global asset allocation market. Here we are not boasting about how good foreign markets are, just because the vision and pattern of smart people are not limited to a single market.