The wealth of high net worth individuals (HNWIs) has grown faster over the last three years than the equity market capitalisation of regional markets across the globe, according to data from the Capgemini and Merrill Lynch 2011 World Wealth Report.
The combined wealth of the world's HNWIs has risen above pre-crisis levels, from US$40.7 trillion in 2007 to US$ 42.7 trillion in 2010, while the market capitalisations - a measure to calculate the overall value of a specific market - of North America, Europe and Asia Pacific were still below 2007 levels.
"High net worth individuals are very good at selecting the right investment areas, because if they had just followed the market capitalisation they would not have been able to surpass those 2007 levels," Capgemini wealth management specialist Dorus van den Biezenbos said.
Van den Biezenbos said part of the explanation could be that HNWIs generally have better access to information and skilled advisers than the average investor.
As a group, HNWIs have been increasing their exposure to equities since 2008, from 25 per cent of their portfolios to 33 per cent in 2010.
Their fixed income exposure remained stable at 29 per cent, but they reduced their cash holdings from 21 per cent in 2008 to 14 per cent in 2010.
Capgemini expects that cash holding will reduce further in 2012 to 11 per cent, while the exposure to equities will increase to 38 per cent.
The number of global HNWIs has also increased from 10.1 million individuals in 2007 to 10.9 million in 2010.
The total number of Australian HNWIs has increased from 173,600 in 2009 to 192,900 in 2010, an increase of 11.1 per cent.
Australia has now the ninth largest population of millionaires out of the 71 countries surveyed and their total wealth over the period increased by 12.1 per cent to US$582.0 billion.
The Asia Pacific region has for the first time overtaken Europe in both the number of millionaires and their combined wealth. The region is now only second to the North American region.
Asia Pacific millionaires differ from their European and North American counterparts in that they have a relative higher exposure to real estate and a smaller exposure to fixed income.
Capgemini defines HNWIs as those with US$1 million or more in investable assets, excluding their primary residence.
