Assets of High-Net-Worth Individuals Reach $37.2 Trillion

June 28, 2007

This article is included in these additional categories:

Asia-Pacific | Europe & Middle East | Global & Regional | Household Income

Driven by a strong global economy, the wealth of the world’s high-net-worth individuals (HNWI*) increased 11.4% to (US) $37.2 trillion in 2006, according to the 11th annual World Wealth Report, released today by Merrill Lynch and Capgemini. That was the first double-digit growth in seven years, according to the report.

The number of HNWI in the world increased 8.3% in 2006, to 9.5 million, and the number of ultra-high-net-worth individuals (Ultra-HNWI**) grew 11.3%, to 94,970.

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The largest growth of the HNWI population occurred in Singapore and India, where the increases over 2005 were 21.2% and 20.5%, respectively.

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The report forecasts that economic growth will slow in 2007 as mature economies grow more moderately.

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According to the Merrill Lynch and Capgemini report:

  • Real GDP and market capitalization growth rates – the two primary drivers of wealth generation – accelerated through 2006, which helped to increase the total number of HNWIs around the world as well as the amount of wealth they control.
  • Emerging markets continued to outperform the rest of the world. China and India, for example, sustained real G.D.P. growth rates of 10.5% and 8.8%, respectively, in 2006.
  • Market capitalizations grew rapidly in Europe, Asia Pacific and Latin America, driven by strong corporate profits, IPO activity and ongoing foreign investment. Although performance varied across the world, almost all indices posted gains. For example, the Dow Jones World Index grew 16.4% in 2006.
  • The BRIC nations (Brazil, Russia, India and China) continued to play increasingly important roles in the global economy in 2006. China and Russia were among the top 10 countries with the fastest-growing HNWI populations. China’s HNWI population grew 7.8%, and Russia’s increased 15.5%.
  • Latin America saw real GDP growth of 4.8% in 2006, and lured substantial foreign direct investment. The region’s HNWI population jumped 10.2% in 2006 as it continued to outperform the global average of 8.3%.
  • The Middle East was the only region where a dispersion rather than consolidation of wealth occurred. The global demand for oil in 2006 helped increase the number of HNWI 11.9%, but a correction in an overvalued stock market pulled down market capitalization rates, slowing total wealth accumulation.
  • In 2006, HNWIs shifted more money into real estate investments, at times liquidating some of their alternative investments to fund these real estate opportunities. Global direct real estate transaction volumes reached $682 billion in 2006, up 38% from 2005. Real estate investment funds, or REITs, performed strongly to create an overall preferred investment channel. While alternative investments remained a key component of HNWI portfolios, overall HNWI allocations to those investments dipped in 2006.
  • The report’s first breakout of philanthropic giving found that HNWI, led by the ultra-wealthy, gave an estimated $285 billion to philanthropic causes in 2006.

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The full text of the report is available at the Merrill Lynch and Capgemini websites.

* Individuals with net assets of at least $1 million, excluding their primary residence and consumables.

** Individuals with net assets of at least $30 million, excluding their primary residence and consumables.

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