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Sophisticated Entrepreneurs Choose Domicile Diversification to Secure Enhanced Value and Yield Through Global Mobility

DR. CHRISTIAN H. KAELIN

DR. CHRISTIAN H. KAELIN

Dr. Christian H. Kaelin is Chairman of Henley & Partners. He is an expert in investment migration and the inventor of the passport index concept.

The shock waves of ongoing Covid-19-driven volatility in 2021 have led to a spike in entrepreneurs building diversified domicile portfolios through investing in residence- and citizenship-by-investment programs to overcome the limitations and associated risks of being restricted to a single jurisdiction.

Henley & Partners saw a 32% increase in the average daily enquiries in the last eight months compared to the first six months of 2020. It is interesting to consider the shifts in the predominant nationalities of entrepreneurs interested in investment migration — the most profound change being a 192% leap in enquiries from US citizens in 2020 compared to 2019. Other notable increases occurred, with over 30% more enquiries made by Canadians and Australians, and increases of 29% and 26% in interest shown by UK and French nationals, respectively.

What is evident is that even those ultra-high-net-worth individuals from advanced economies with premium passports and world-class healthcare systems are now looking to create integrated investment migration portfolios of complementary citizenship and residence options. They all share the same intention — to access health security and optionality in terms of where they can live, work, study, and invest, for themselves and their families.

Diversify domicile options to reduce exposure and create value

More and more investors are realizing that while a single alternative residence or citizenship will always be a great asset, as a hedge against manifold levels of volatility, investing in a suite of domiciles worldwide will provide them with an enhanced combination of short-term value and long-term yield. Most investment migration program options include the whole family, and many extend to parents, siblings, and even grandparents. The more jurisdictions a family can access, the more diversified its assets and opportunities and the lower its exposure to country-specific risk and global uncertainty will be.

For decades, it has been accepted best practice to invest in multiple regions and diverse asset classes, from equities to real estate, to spread risk and maximize value — the same applies to your residence. In an increasingly unpredictable world, geographically diversifying your domicile options enhances long-term success by securing access to top quality education and healthcare, for example. It also reduces exposure to risks such as crime, political instability, poor governance, and unexpected policy changes.

Multiple residence options will futureproof your family

Over the past year we have learned that nowhere is infallible — even the world’s superpowers floundered and many failed their citizens. Entrepreneurs and investors from emerging and developed economies alike now recognize and appreciate that a diversified investment migration portfolio adds impetus to their wider wealth planning and legacy management strategies, acting as a buffer against further downside, generating new value, and improving the entire family’s well-being. Many are pursuing alternative business, career, educational, and lifestyle opportunities on a global scale, broadening their range of options and transcending the inherent constraints of their countries of origin to improve the resilience of their portfolios and ensure physical and financial longevity and legacy.

Some investors are attending to the needs of multiple generations and therefore apply for one program for themselves, another that will sustain their children’s educational and work requirements in several years, and yet another that appeals to their retired parents. Other investors apply for multiple options because their immediate requirements are met by a certain program but looking ahead, they have a different opportunity in mind.

Additional incentives to secure multiple citizenships

Covid-19 is making people feel their citizenship more than ever before, as Prof. Peter J. Spiro, Charles Weiner Professor of Law at Temple University Law School, wrote in the Global Mobility Report Q1 2021, but it is also giving us more reason to secure additional citizenships. Even holders of premium citizenships now have a compelling incentive to acquire further citizenships, and others will consider additional citizenships as a form of health insurance against future pandemics or other global disruptions.

Healthcare, safety, and better prospects are new priorities

Another new trend, if somewhat predictable, is the ascendance of health security, which has become the top priority for many. Whereas before Covid-19, investors chose where to reside based on factors such as quality of life, education options, and travel freedom, now the biggest drawcards include safety and security, access to first-class healthcare, reliable infrastructure, risk management, and most importantly — better prospects for their families. Our recently launched Investment Migration Programs Health Risk Assessment is useful new tool for global citizens seeking health security via investing in alternative residence or citizenship.

As 2021 progresses, and vaccination programs are rolled out in the new race to vaccinate, countries that mismanaged the pandemic have a chance to redeem themselves and regain the trust of their citizens. This will also provide investors with another yardstick by which to measure destinations that offer investment migration programs. Building a varied investment migration portfolio can hedge against risk and uncertainty and facilitate wealth portfolio and holistic lifestyle diversification, creating significant positive optionality.

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