Wednesday, June 21, 2006

World Wealth Report - a summary

The Merrill Lynch - Capgemini World Wealth Report was released this week. The report provides a snapshot of global personal financial wealth during 2005. As usual it made interesting reading.

The number of High Net Worth Individuals (HNWIs) globally increased by 6.5% to 8.7 million. The aggregate wealth of those HNWIs increased by 8.5% to US$33.3 trillion. These figures show that within the ranks of the world's wealthy, the really rich got richer at a faster rate than the more modestly wealthy. The number of Ultra-HNWIs increased by 10.2% to 85,400 which just shows how few truly wealthy individuals there are.

The definitions? HNWIs are defined as persons with "net financial assets" of at least US$1 million - excluding their primary residence and consumables. The exclusion of the family home means that there will be millionaires who fall outside the HNWI definition. How many? I have no idea but looking at housing prices in developed markets around the world (and some emerging markets) I would expect the number to be large.

Ultra-HNWIs are those with financial assets exceeding US$30 million.

Given the performance of equities and real estate in emerging markets in 2005, it is not surprising that it was in emerging markets such as South Korea (21%), India (19%), Russia (17%) and South Africa (15%) that the ranks of HNWIs grew the quickest in percentage terms. In contrast, the more developed markets in North America (6.9%), Europe (4.5%) and Asia-Pacific (7.3%) experienced much slower rates of growth in HNWI numbers.

In terms of absolute numbers, North America (2.9 million), Europe (2.8 million) and Asia-Pacific (2.4 million) make up the vast majority if the worlds HNWI population.

The report also contains some interesting information about how the wealthy invest their money and the challenges they face in preserving and growing their wealth. I will comment on these issues once I have finished reading the report.

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