Affluent investors across the UK are reshaping and diversifying their portfolios as they boost allocation to real estate, alternatives and precious metals in 2025, with younger generations leading the way in exploring new asset classes.
This diversification trend comes as investors continue to reduce the cash allocation in their portfolio by half, according to HSBC’s Affluent Investor Snapshot, with cash only accounting for 19 per cent of the average portfolio.
While stocks, bonds and managed investments remain the top financial products currently owned by UK investors, digital gold was the most popular product type investors were looking to add to their portfolio in 2025.
Across the UK, four out of 10 investors planned to own gold within the next 12 months, with 30 per cent aiming for physical gold and 21 per cent targeting digital gold as a part of their diversified portfolios. Although this fell behind the global average of five in 10, it remained indicative of a strong trend towards diversification into gold.
Meanwhile, notable increases in 2025 were seen in real estate (+4pts), alternatives (+3 pts), gold (+3pts) and cryptocurrencies (+4pts). Globally, the most increased asset classes were gold and precious metals and alternatives.
Xian Chan, Head of Premier Wealth at HSBC UK, says: “There is no doubt that there is still a place for cash savings in people’s portfolios: those are essential for emergency funds and to meet short-term savings goals. However, the move away from cash, which is a trend both globally and within the UK, indicates a real shift in how people manage their money and approach building their wealth over their lifetime.
“Investors are re-allocating from cash to a wide array of asset classes, including gold, real estate and alternative assets, which shows the broad range of ways portfolios are diversifying. Throughout history, gold has been used as a storer of value and financial security, with governments often tying their currencies to it. It also has a track record of being resilient and a good hedge against inflation, which is why it often sees a surge in popularity during more uncertain times.”
Millennials and Gen-Z leading the way on asset diversification
The data showed that gold asset allocation had nearly doubled in the UK this year, shifting from 4 per cent of portfolios in 2024 to 7 per cent. Gen Z and Millennials over-indexed on this allocation, from 6 per cent last year to 8 per cent this year.
Younger investors in the UK also tripled their allocation to alternative assets over the last 12 months, while also leading on the move away from cash, reducing average holdings from 35 per cent to 15 per cent.
Millennials and Gen-Z also showed higher confidence in reaching their financial goals compared to Gen-X and Baby Boomers, particularly when it came to short term goals. Indeed, 85 per cent of younger investors were confident in achieving short term goals (vs 77 per cent amongst older generations), while 78 per cent were comfortable around medium term goals (vs 65 per cent) and 82 per cent were secure in achieving long-term financial ambitions (vs 69 per cent).
Xian Chan adds: “We are seeing Gen-Z and millennials lead the way in exploring different assets, which is indicative of increasingly complex requirements amongst younger investors when it comes to balancing their portfolios. However, with social media coming out as the most used educational resource for learning about wealth amongst that generation, it’s clear that younger investors are educating themselves on varied asset classes and consuming a large quantity of educational content online.
“It’s reassuring to see that generation also leading the way when it comes to meeting their financial goals, which once again indicates that they feel like they have the tools to plan for their future both in the short and longer term.”
