Investable assets refer to the assets that can be invested to generate returns, which is an important concept in wealth management. It generally excludes illiquid assets like owner-occupied housing and durable consumer goods. The key factors determining investable assets include cash & deposits, stocks, funds, bonds, insurance, bank wealth products, overseas assets etc. Understanding investable assets allows investors and wealth managers to better evaluate net worth and design optimal investment portfolio.
Investable assets generally cover liquid financial instruments that can generate investment returns
According to the article, investable assets generally include cash & deposits, tradable stocks, mutual funds, bonds, investment properties, insurance products, bank wealth management products, overseas assets and other domestic investments that can generate returns. Illiquid assets like owner-occupied housing, non-listed company shares, and durable consumer goods are usually excluded from investable assets.
Investable assets reflect actual net worth available for investments
The concept of investable assets allows more accurate assessment of actual net worth available for investments, compared to simplistic asset-liability calculations. According to Bain & Company, there were about 1 million Chinese households with over RMB 10 million investable assets in 2014. Investable assets better reflect financial capability.
Calculation of investable assets facilitates optimal portfolio design
Investable assets serve as key inputs for optimal portfolio allocation models like mean-variance optimization. Accurate investable assets calculation allows investors and wealth managers to better understand risk preference and design optimal portfolios catering to specific constraints and return targets.
Investable assets threshold is used to screen qualified investors
Many financial products and platforms have investable assets requirements for investor qualification. For instance, China’s private funds require minimum RMB 1 million investable assets, showing appropriate risk identification capability. Investable assets thresholds ensure qualified investor participation.
In summary, investable assets generally cover liquid assets that can generate investment returns, excluding illiquid assets. It allows better evaluation of actual net worth available for investments and facilitates optimal portfolio design and investor screening.