Integrated Risk Management for Multi-Asset HNWI Portfolios (2025)

For high-net-worth individuals (HNWIs), risk is not simply about market volatility — it’s about preserving purchasing power, liquidity, and legacy across generations.In 2025, wealth is exposed to a complex risk environment:

Rand volatility: The ZAR remains one of the most volatile emerging market currencies, with swings of up to 20% against the USD in the past 12 months.

Geopolitical uncertainty: Conflicts, trade restrictions, and political instability affect both developed and emerging markets.

Inflationary pressures: While global inflation has eased from 2022–2023 highs, South African CPI remains sticky around 5–6%, eroding real returns.

Regulatory changes: Shifts in tax laws, exchange control, and cross-border reporting (CRS) affect portfolio structure.

A truly integrated approach to risk management addresses all of these factors together, rather than in isolation.

Our approach is multi-dimensional, ensuring every layer of wealth is protected:

We ensure exposure is spread across:

Geographies: Developed markets (US, EU, Japan), emerging markets, and frontier economies.

Asset Classes: Equities, fixed income, commodities, private equity, hedge funds, and alternative assets (e.g., infrastructure).

Currencies: USD, EUR, GBP, CHF, and others as strategic hedges against rand weakness.

Natural Hedges: Offshore investments in USD/EUR assets that inherently protect against ZAR depreciation.

Active FX Management: Forward contracts and options to manage short-term currency risk.

Multi-Currency Banking: Maintaining reserves in multiple hard currencies for liquidity flexibility.

Rather than chasing performance, allocations are set based on volatility targets and risk budgets, not just returns.Example for a R250 million HNWI portfolio:

40% Global Equities (hedged and unhedged mix)

25% Global Fixed Income (investment grade + high yield)

15% Alternatives (private equity, hedge funds, infrastructure)

10% Commodities & Precious Metals

10% Strategic Cash & Short-Term Instruments

Tier 1: Immediate-access cash (3–6 months living expenses).

Tier 2: Short-term instruments (0–2 years horizon).

Tier 3: Growth-focused, less liquid assets (5–10+ years).

Risk not suited to market hedging is transferred via:

Specialist Insurance: High-value property, fine art, collectibles.

Key-Person & Buy-Sell Cover: For business owners.

Whole-of-Life & Endowment Policies: To fund estate duties and cross-border liabilities.

Client Profile: R400 million net worth, South African base, assets in SA, UK, and US.Challenge: Rand depreciation risk, estate duty exposure, and concentration in SA real estate.Solution Implemented by Vereles:

Reduced SA property from 45% to 20% of portfolio.

Added USD and GBP-denominated investment-grade bonds for income stability.

Established Mauritian trust to hold global equities, optimising tax and succession.

Layered in legacy cover to fund potential R25m estate duty liability.Outcome:

Currency exposure reduced rand risk by 60%.

Portfolio volatility decreased by 22%.

Estate duty funding fully secured without liquidating assets.

Risk management is not just about downside protection — it’s about ensuring opportunity capture in all market conditions.

Global diversification is essential for rand-based investors.

Currency management and liquidity planning are as important as asset selection.

An integrated approach avoids costly gaps between investment, tax, and risk planning.

The information provided in this publication is for educational and informational purposes only and does not constitute financial, investment, tax, legal, or other professional advice. While every effort has been made to ensure the accuracy of information at the time of publication, Vereles Wealth makes no representation or warranty, express or implied, regarding its completeness, reliability, or suitability for any purpose.

Nothing contained herein should be relied upon as a substitute for independent professional advice. All investment and financial decisions should be made in consultation with a licensed Financial Services Provider (FSP) or other qualified advisor, taking into account your individual objectives, financial situation, and needs.

Vereles Wealth, its directors, officers, and affiliates accept no liability for any loss, damage, or expense of any nature whatsoever arising from reliance on the information provided. Past performance is not necessarily indicative of future results.