Mitihoon – SCB WEALTH recently held a seminar under the concept “The Future of Wealth: Unlocking Alternative Opportunities” exclusively for wealth clients. The event aimed to share insights and explore investment opportunities in alternative assets including Private Assets, Private Equity, and Hedge Funds—key tools for generating compelling returns amid global economic uncertainty.
The seminar was honored by the presence of globally renowned investment experts, including: Ms. Sunnie Yun (2nd from left), Head of Private Wealth, Southeast Asia & Korea, Partners Group Singapore, Mr. Edwin Chan (3rd from left), Managing Director, Head of Client Solutions APAC, iCapital, Mr. Yod Chinsupakul (5th from left), CEO of LINE MAN Wongnai , Mr. Ling Kwok (6th from left), Partner & Chief Investment Officer (CIO), Quantum GBL Asset Management and Ms. Samantha Lin (7th from left), CFA, Director of Alternatives, Franklin Templeton Core Asia
SCB executives in attendance included: Mr. Sornchai Suneta (4th from left), CFA, Senior Executive Vice President, Head of Wealth & Investment Product, Consumer Banking Group, Mr. Patrick Poulier (1st from left), SEVP, Head of Financial Markets and Head of Private Banking Relationship Management, Ms. Salisa Hanpanich (8th from left), FEVP, Head of High Net Worth & Affluent Segment and Acting FEVP, Wealth & Insurance Capability Development. The seminar took place recently at the Hyatt Regency Bangkok.
Mr. Sornchai Suneta, CFA, SEVP and Head of Wealth & Investment Product at SCB, stated: “Alternative investment is not just a trend it is the future of long-term investing. In today’s volatile environment, relying solely on traditional assets like equities and bonds is no longer sufficient for effective diversification, as these assets increasingly move in the same direction.”
Investors should consider expanding their diversification beyond traditional assets into alternative investments assets with low correlation to public markets. These alternatives can help reduce portfolio volatility and enhance long-term return potential. Attractive opportunities include: Private Equity investing in unlisted companies, Private Debt – lending instruments not traded on public markets, Hedge Funds – flexible strategies designed to generate returns even in volatile market conditions. All these instruments serve as key tools for portfolio risk management.
Mr. Yod Chinsupakul, Chief Executive Officer of LINE MAN Wongnai, noted that as a privately held venture capital-backed company, he believes VCs prioritize early-stage investments based on two key factors:
- Market Risk: VC firms prioritize businesses with proven customer demand and successful track records in other countries. Examples include food review platforms such as Yelp (US), Tabelog and Hot Pepper (Japan), and OpenRice (Hong Kong), all of which have achieved widespread popularity and high market capitalizations. Their success gives investors confidence that similar business models can thrive in new markets. Wongnai initially secured funding based on this rationale.
From a VC’s perspective, the food delivery business represents a globally validated model with consistent demand and a competitive structure, typically dominated by two major players in each market. This reduces market risk, as the business model has already been proven internationally and is not limited to specific geographies like Thailand.
A key trait of skilled investors in off-market businesses is their clear focus on specific sectors or business types. When evaluating startups that have yet to generate revenue, investors rely on alternative indicators such as user numbers, review volume, restaurant coverage, and the quality of the management team. For more established but still private businesses, investors look for experienced teams and robust operational data to support investment decisions. Strong governance is also a critical factor; investors tend to avoid businesses with weak leadership or poor governance.
- Execution Risk: In early-stage startups, investors focus heavily on execution risk, which involves the management team’s ability to implement their strategy effectively. Investors assess strategies for user acquisition, review generation, marketing, and cost control. As companies progress to the growth stage, additional criteria such as revenue growth and profitability come into play. Early-stage investing requires confidence that a startup’s plan is both realistic and executable, with measurable results.
In Thailand, off-market investment opportunities are believed to be more prevalent in the SME sector than in the tech space. These include businesses in retail, beauty, services, and food.
Ms. Sunnie Yun, Head of Private Wealth, Southeast Asia & Korea, Partners Group Singapore, stated: “The opportunities in private markets are growing significantly. In the U.S. alone, there are approximately 5,000 publicly listed companies, while there are more than 2 million private companies. This reveals a highly competitive public market, but also a vast untapped potential in the private space.”
Private companies can generate higher returns with lower volatility compared to traditional assets. Thanks to advances in financial technology and tools, access to private asset investments is easier than ever. Investors today can enter these markets with lower capital and shorter investment periods than in the past.
One particularly interesting option is Royalty Investment investing in intellectual property (IP) rights such as patents, copyrights, trademarks, or proprietary technologies. These assets generate long-term recurring income, such as music copyrights, film licenses, pharmaceutical patents, or cutting-edge technology. The benefits include Efficient management with low operational cost, Excellent inflation hedging capability, Low sensitivity to public market volatility, due to minimal correlation with stocks or bonds, Steady cash flows even during economic slowdowns
For instance, during economic downturns, people still require medicine and continue listening to music highlighting the consistent income potential of pharmaceutical patents and music royalties.
In summary, Royalty Investment represents a compelling alternative asset for investors seeking stable income and resilient portfolio performance amid economic uncertainty. Diversifying royalty holdings across sectors enhances income stability and contributes to long-term, consistent returns.
Ms. Samantha Lin, CFA, Director of Alternatives, Franklin Templeton Core Asia, stated: “In today’s highly volatile markets and with rising uncertainty in the global financial system, many investors are turning to Private Equity Secondaries investments in existing private equity funds traded through the secondary market.”
To explain simply, Private Equity Secondary investing involves acquiring fund units from original investors such as insurance companies, pension funds, or university endowments. This approach helps those investors improve their liquidity while enabling secondary buyers like Franklin Templeton to acquire assets at a discount, thereby providing a price cushion and reducing downside risk.
Another key benefit of Private Equity Secondary investing is its ability to mitigate the J-Curve Effect by investing at a stage when companies have already begun generating cash flows. This allows investors to receive early cash distributions sooner than traditional early-stage investments, which require a longer waiting period for businesses to grow and become profitable.
Compared to traditional assets, the performance gap between an average and a top-tier manager may be only 2–3%. But in the world of private assets, this difference can be as much as 20%, emphasizing the critical role of fund manager expertise.
Franklin Templeton’s “Franklin Lexington PE Secondaries Fund,” managed by Lexington Partners one of the world’s leading private equity secondary managers targets an 11–13% annual return, aiming to provide investors with steady, achievable returns rather than overly aggressive expectations. While Private Equity Secondaries are still relatively illiquid, the fund structure is designed to be more accessible to general investors. The fund allows: Monthly subscriptions, Quarterly redemptions, 5–15% liquidity reserve to accommodate investor withdrawals.
Mr. Edwin Chan, Managing Director, Head of Client Solutions APAC, iCapital, stated: “Hedge Funds are highly flexible investment vehicles that can implement a broader range of strategies than traditional assets. They stand out for their ability to generate consistent returns across market conditions, while significantly reducing portfolio volatility.”
By incorporating Hedge Funds into a portfolio previously dominated by stocks and bonds, investors can improve return potential while lowering portfolio volatility.
Over the past 50 years, equities and bonds have moved together (positive correlation) during high-inflation periods when stocks rose, bonds did too, and vice versa. During low interest rate environments, they had a negative correlation, allowing one asset to offset the other. However, in today’s environment, the two asset classes have once again become positively correlated, making traditional diversification inadequate.
This shift underscores the growing importance of Hedge Funds in modern portfolio construction.
Even though the U.S. Federal Reserve may lower interest rates over the next 12–18 months, interest levels remain relatively high. This environment is well-suited for diversified Hedge Fund strategies that aim to deliver attractive returns.
Examples of Hedge Fund strategies include:
- Long/Short Strategy – investing in expected gainers while shorting potential losers, often using derivatives to enhance returns
- Event-Driven Strategy – exploiting corporate events like M&A based on insider knowledge before markets react
- Macro Strategy – analyzing global macroeconomic trends such as interest rates, inflation, and country outlooks to develop strategic positions
In the past, Hedge Funds were accessible only to ultra-high-net-worth individuals (UHNWIs) with tens of millions in capital. Today, platforms like iCapital offer more flexible investment structures, making global hedge funds accessible to wealthy investors in Thailand.
Investors are advised to select Hedge Funds with strong long-term track records and robust downside protection to manage risks effectively.
Mr. Ling Kwok, Partner and Chief Investment Officer (CIO) at Quantum GBL Asset Management, shared findings from long-term studies of endowment fund management at leading global universities. The results show that investing in Hedge Funds not only enhances returns but also significantly reduces portfolio volatility especially in long-term investment contexts.
Over a 60-year period, assuming an initial investment of USD 100 and an asset allocation of 70% equities and 30% bonds with annual withdrawals of 5% (a structure similar to endowment funds or family offices), only two distinct time periods resulted in positive net returns after withdrawals. This suggests that traditional assets alone may not be sufficient for all market conditions.
Conversely, allocating even a small portion of the portfolio to Hedge Funds can improve average returns by approximately 1%. While seemingly minor, this uplift has a meaningful impact on long-term performance and portfolio sustainability.
A 25-year study of 118 U.S. university endowment funds found:
- The top-performing quartile achieved an average annual return of 7%
- The bottom quartile delivered just 7%
- The gap between the first and last quartile was only 6%, but when compounded over 25 years, it led to a threefold difference in portfolio value
The key driver behind this difference? Access to advanced investment strategies particularly Hedge Funds
“Top institutions like MIT, Harvard, and Princeton have long had access to Hedge Funds, enabling them to not only outperform the market but also build long-term wealth in a meaningful way,” Mr. Ling said.
Hedge Funds also stand out for professional-grade risk management using sophisticated strategies such as Long/Short, Event-Driven, and Global Macro approaches.
While traditionally limited to institutional and ultra-wealthy investors, platforms such as Quantum GBL and iCapital are now democratizing access to global hedge funds by offering more flexible minimums and investor-friendly structures designed for individual wealthy clients.
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