Monday, June 27, 2011

World Wealth Report 2011

The 2011 edition of the Capgemini Merrill Lynch World Wealth Report provides an interesting snapshot of the world's high and ultra high net worth populations. While the information in the report is very much in summary form, it is still interesting to see the trends in how the wealthy allocate their assets.

Some highlights:

  • globally, HNWIs increased their financial wealth by 9.7% and their numbers by 8.3%

  • there are now more HNWIs in Asia-Pacific (3.3 million) than in Europe (3.1 million). North America still has the highest HNWI population at 3.4 million

  • the UHNWI population grew more rapidly than the HNWI population. There are now an estimated 103,000 UHNWIs

  • HNWIs increased their allocations to equities (to 33% from 29%) and reduced allocations from cash/deposits (to 14% from 17%) and fixed income (to 29% from 31%)

  • North American HNWIs increased their exposure to home country investments (to 76%) but are expected to reduce home country allocations going forward. In contrast both European (to 56% from 59%) and Asia-Pacific HNWIs (to 57% from 64%) reduced their home country allocations

  • the average age of HNWIs is falling with the percentage who are aged under 45 rising from 13% to 17%. The number of young HNWIs is particularly high in Asia-Pacific (41%)

  • the percentage of HNWIs who are women continues to rise strongly (to 27% from 24%). North America continues to lead in this figure with women making up 37% of the HNWI population

The rise in the number of HNWIs and UHNWIs and their average wealth levels is hardly surprising. The numbers merely reflect a rise in asset prices (in particular global equities and Asian real estate) during 2010. An increase in exposure to equities after equity prices has risen is also unsurprising. The more interesting information are the trends within the larger numbers - the growing levels of wealth in developing economies, the increasing fragmentation of wealth accross the globe, within age groups and between genders.

HNWIs are defined as having investable assets of USD1 million or more, excluding primary residence, collectibles, consumables and consumer durables. For UHNWIs the threshold is set at 30 million.

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