Saturday, June 30, 2007

World Wealth Report 2007

The 2007 edition of the Gap Gemini Merrill Lynch World Wealth Report was released earlier this month. Once again it made interesting reading. Among the highlights:

1. the number of High Net Worth Individuals in the world increased by 8.3% to 9.5 million;

2. the number of Ultra-HNWIs increased 11.3 % to 94,970;

3. the aggregate net worth of all HNWIs was US$37.2 trillion, an 11.4% increase over 2005;

4. the incease in the number of HNWIs and their aggregate net worth was primarily driven by GDP growth and rising equity markets (no surprise);

5. the countries with the fastest growing populations of HNWIs were all either emerging markets or countries with close connections with emerging markets. Singapore, India, Russia and Indonesia produced the largest percentage increases in the number of HNWIs. All of these countries had strong stock markets during 2006;

6. Ultra-HNWIs grew their wealth faster than the HNWI population as a whole (this was not surprising);

7. HNWIs reallocated some of their assets away from alternative investments into real estate in 2006. Interestingly, about half of the HNWIs asset allocation to real estate was in the form of second or holiday homes, frequently purchased without the use of mortgage finance;

8. they also spent more money on "investments of passion" such as art, jewlery, wine, antique cars etc. Increasingly, investments of passion are viewed as investable assets rather than just hobbies of the wealthy;

9. geographical asset allocation is trending away from North America to Europe.

A High Net Worth Individual is a person whose financial assets (i.e. assets other than the primary residence) exceeed US$1 million. An Ultra High Net Worth Individual is a person whose financial assets exceed US$30 million.

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