Alternative Investments of high-net-worth individuals

Alternative investments are going mainstream.

By Jack Caporal – Updated Nov 17, 2025 at 2:05 PM EST

Key Points

Ultra-high-net-worth investors allocate 20% of portfolios to alternatives vs. nearly 0% for average investors.
High-net-worth individuals boosted their alternative investments allocation to 28% in 2022, a 2% increase.
Alternative investments, including private equity and real estate, can provide a hedge against inflation and market volatility.

It's no secret that the ultra-rich have access to the best alternative investments, which are often unavailable to the average investor, such as expensive wine, fine art, and equity in private companies.

What may come as a surprise is just how much their portfolios are weighted towards these types of investments. Among ultra-high-net-worth investors (those with a net worth of at least $30 million), alternative investments make up 20% of assets, compared to almost 0% for the average investor.

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alternative-investments — Image source: Getty Images.

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Financial Securities

A tradeable asset that holds monetary value.

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Data source: KKR (2024).
ASSETS	High-net-worth, asset allocation as a percent of AUM	Family offices, asset allocation as a percent of AUM
Cash	34%	11%
Alternatives	28%	42%
Equities	23%	32%
Credit	15%	15%

Alternative investments as a response to volatility

One of the primary benefits of alternative investments is that they provide a means to diversify portfolios and mitigate stock market volatility, as well as offer a hedge against inflation.

Despite market volatility and red-hot inflation in 2022, the majority of investors adhered to their alternative investment strategy, according to the 2023 EY Global Wealth Research Report. Fifty-six percent made no change to their alternative investment approach, 27% added, and 17% invested less in alternatives.

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Data source: EY (2023).
INVESTMENT IN ALTERNATIVE INVESTMENT PRODUCTS IN RESPONSE TO MARKET VOLATILITY	PERCENT OF INVESTORS
More	27%
No change	56%
Less	17%

Asset allocation for high-net-worth families

High-net-worth family offices allocate 29% of their assets to listed equities, which comprise the largest portion of their investments, broken down by subgroup, according to KKR's survey.

Private equity is next, with high-net-worth families allocating 27% of their assets to this type of alternative investment. And, like many Americans, they also allocate a portion (15%) of their assets toward investing in real estate and other tangible assets.

Family offices have pared their exposure to hedge funds since 2017 and equities since 2020. They’ve increased their allocation to real assets, which include real estate, commodities, natural resources, and equipment.

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Data source: KKR (2024).
Asset Class	2017	2020	2023
Public equities	29%	31%	29%
Liquid credit	9%	10%	10%
Private equity, venture capital	24%	27%	27%
Private credit	6%	4%	4%
Hedge funds	12%	6%	6%
Real assets	11%	13%	15%
Cash	10%	9%	9%
Asset class	2017	2020	2023

Alternative investment portfolio allocation by net worth

Alternative investment ownership increases in proportion to wealth, according to Bain & Company. Ultra-high-net-worth investors allocate around 20% of their investments to alternatives, compared to almost 0% for mass affluent investors, and just 5% for investors with annual incomes between $5 million and $30 million.

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Data source: Bain & Company (2024).
Investor Segment	Net Worth Range	Allocation to Alternatives
Mass-Affluent	$100k – $1M	~0%
High-Net-Worth	$1M – $5M	1% – 2%
Very-High-Net-Worth	$5M – $30M	~5%
Ultra-High-Net-Worth / Family Offices	$30M+	~20%

Percentage of investors with alternative investments by region

North America is the region with the lowest usage of alternative investments. This is most likely due to the strong historical performance of the stock market, since investors don't need to seek out alternatives to get a good return.

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Data source: EY (2021).
Region	Current usage level of alternative investments	Estimated usage level by 2024
Global	32%	48%
North America	18%	27%
Asia-Pacific	37%	61%
Europe	37%	54%
Middle East	55%	71%
Latin America	70%	79%

Percentage of investors with alternative assets by generation

Gen Xers are the most likely to have alternative investments, but that may not last much longer. The percentage of millennials who use alternative investments is expected to explode by 2024.

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Data source: EY (2021).
Generation	Current usage level of alternative investments	Estimated usage level by 2024
Millennial	32%	60%
Generation X	38%	54%
Baby boomer	26%	34%

Satisfaction with alternative investments

Younger investors and wealthier investors are more likely to be satisfied with the performance of their alternative investments, according to new data from EY.

Sixty-three percent of the millennial clients EY surveyed are happy with how their alternative investments have performed, compared to just 40% of baby boomers.

When it comes to wealth, 45% of EY's mass affluent clients are satisfied with the performance of their alternative investments, compared to 63% of very-high-net-worth clients and 69% of ultra-high-net-worth clients.

Overall, 48% of EY's surveyed clients are satisfied with how their alternative investments have performed.

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Data source: EY (2023).
CLIENT TYPE	PERCENT SATISFIED WITH PERFORMANCE OF ALTERNATIVE INVESTMENTS
Millennial	63%
Gen X	49%
Baby boomer	40%
Mass affluent	45%
High net worth	47%
Very high net worth	63%
Ultra-high net worth	69%
All clients	48%

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Data source: Author's calculations. Annualized returns.
Index	2024	Past 3 years (2022-2024	Past 5 years (2020-2024
S&P 500	15.1%	21.6%	14.5%
Cambridge Associates U.S. Private Equity Index	8.10%	4.40%	15.80%
Cambridge Associates U.S. Venture Capital Index	6.20%	-6.40%	15.10%
Bloomberg Aggregate Bond Index	1.25%		-0.32%
Cliffwater Direct Lending Index	11.30%	--	9.55%
NCREIF Property Index*	0.60%	3.13%	5.66%
Barclay Hedge Fund Index	9.68%	9.05%	9.70%

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Data source: Knight Frank (2025).
Category / Index	12-Month % Change	5-Year % Change	10-Year % Change
Whisky	-9%	-10%	192%
Furniture	-3%	61%	141%
Watches	2%	53%	125%
Handbags	3%	34%	86%
Knight Frank Luxury Investment Index	-3%	21%	73%
Cars	1%	30%	59%
Art	-18%	2%	54%
Coins	2%	24%	48%
Wine	-9%	8%	37%
Jewellery	2%	20%	34%
Colour Diamonds	-2%	5%	4%

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Institutional investors plan to increase their alternative investments

The majority (81%) of the institutional investors surveyed by Preqin intend to increase their allocation of funds to alternative investments by 2025.

Just 3% intend to decrease their allocation to alternative investments in that time frame.

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Data source: Preqin (2020).
Institutional investors' plans for allocations to alternative investments by 2025	Percentage
Will increase significantly	26%
Will increase	55%
Will stay the same	16%
Will decrease	2%
Will decrease significantly	1%

Institutional investors' plans for allocation to alternative investments by asset

Private equity is the best-performing alternative investment, and it's also where institutional investors plan to invest more, with 79% saying they'll increase their asset allocation by 2025, according to Preqin.

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Data source: Preqin (2020).
Institutional investors' plans	Private equity	Private debt	Hedge funds	Real estate	Infrastructure	Natural resources
Will increase significantly	23%	16%	8%	10%	15%	6%
Will increase	56%	51%	27%	41%	51%	29%
Will stay the same	17%	25%	34%	33%	24%	38%
Will decrease	3%	6%	19%	13%	6%	19%
Will decrease significantly	1%	2%	13%	2%	3%	8%

From alternative to mainstream

With ultra-high-net-worth investors devoting a fifth of their portfolios to alternative investments, it's clear that they've entered the mainstream among the wealthy. However, individuals with higher net worths have access to a wider range of investment options. What about alternative investments for retail investors?

Among fund managers surveyed by Preqin, 15% reported offering retail investors access to alternative investments and plan to expand these offerings in the future. Another 17% didn't currently offer these investments to retail investors but planned to do so in the future.

Retail investors already have access to various types of alternative investments, including real estate, luxury goods, and cryptocurrency. Real estate investment trusts (REITs) have become a popular means for individual investors to access the real estate market. New alternative investment funds and platforms are emerging, offering the average investor the opportunity to invest in shares of fine wine, art, cars, and other high-value assets.

For retail investors seeking to diversify their portfolios with alternative investments, an increasing number of options are becoming available. For the ultra-wealthy, alternative investments are likely to remain an extremely popular investment option.

Sources

Bain & Company (2024). "Global Private Equity Report 2023."
Chartered Alternative Investment Analyst Association (2020). "The Next Decade of Alternative Investments: From Adolescence to Responsible Citizenship."
EY (2021). "2021 EY Global Wealth Research Report."
EY (2023). “2023 EY Global Wealth Management Research Report.”
Financial Planning Association (2023). “The 2023 Trends in Investing Survey.”
Georgetown University McDonough School of Business (2025). "Alternative Investments by Individual Investors: The Next Frontier for Private Equity."
KKR (2024). “Loud and Clear.”
Knight Frank (2025). “The Wealth Report.”
Preqin (2020). "The Future of Alternatives 2025."
Preqin (2020). "The Past, Present, and Future of the Alternative Assets Industry."
Preqin (2023). “Preqin Global Report 2023: Alternative Assets.”
Preqin (2024). “Global alternatives markets on course to exceed $30tn by 2030 — Preqin forecasts.”

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About the Author

Jack Caporal is the Research Director for The Motley Fool and Motley Fool Money. Jack leads efforts to identify and analyze trends shaping investing and personal financial decisions across the United States. His research has appeared in thousands of media outlets including Harvard Business Review, The New York Times, Bloomberg, and CNBC, and has been cited in congressional testimony. He previously covered business and economic trends as a reporter and policy analyst in Washington, D.C. He serves as Chair of the Trade Policy Committee at the World Trade Center in Denver, Colorado. He holds a B.A. degree in International Relations with a concentration in International Economics from Michigan State University.

TMFJackCap

Jack Caporal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Alternative Investments of the Ultra-Wealthy in 2026

Alternative investments are going mainstream.

Key Points

Financial Securities

Alternative investments as a response to volatility

Asset allocation for high-net-worth families

Alternative investment portfolio allocation by net worth

Percentage of investors with alternative investments by region

Percentage of investors with alternative assets by generation

Satisfaction with alternative investments

Institutional investors plan to increase their alternative investments

Institutional investors' plans for allocation to alternative investments by asset

From alternative to mainstream

Sources

About the Author

Stocks Mentioned

Premium Investing Services

What are alternative investments?

Examples of alternative investments

Alternative investment use among investors

Alternative investments as a response to volatility

Asset allocation for high-net-worth families

Alternative investment portfolio allocation by net worth

Percentage of investors with alternative investments by region

Percentage of investors with alternative assets by generation

Satisfaction with alternative investments

How luxury goods fare as alternative investments

Digital assets as alternative investments

Alternative investments are poised for growth

Institutional investors plan to increase their alternative investments

Institutional investors' plans for allocation to alternative investments by asset

From alternative to mainstream

Sources

Performance data for alternative investments and the S&P 500