How Rich Are the Rich? For them Malta is a place to be
“The new ‘World Wealth Report’ for 2015 was released last week from Capgemini and RBC Wealth Management. The focus is on the population of high-net-worth individuals, or HNWIs as the report calls them. … Perhaps the most significant news is that the wealthy now have more capital invested in stocks than any other asset class.”
Investments: Perhaps the most significant news is that the wealthy now have more capital invested in stocks than any other asset class. The report notes that “equity allocations moved slightly ahead of cash as the dominant asset” in the portfolios of the rich. Wealthy Japanese and Latin Americans increased their equity holdings the most. Note that this is based on surveys, not actual portfolio data.
It is intriguing to consider that despite the strong rally in equities — especially in the U.S. since 2009 and in China since 2014 — cash was still the top holding a year earlier. It is unclear if the increase in equity holdings came about through an increased allocation to stocks or through appreciation. I suspect it may be the latter.
The disproportionate amount of cash is intriguing as well. The top two reasons respondents gave for holding so much cash were 1) as a hedge in case of market volatility and 2) lifestyle needs. This suggests the scars from the financial crisis linger, but that the willingness of the rich to spend on luxury goods won’t end.
Finally, the disproportionate impact the 1 percent has on just about everything is something to keep in mind. If you want to better understand much of what is going on — from policy to investing to the economy — what the wealthiest investors do tells us a lot about where the world is headed.
Ultra-HNWIs: The 1 percent of the 1 percent now account for 35 percent of the wealth held by the richest people.
Wealth grew even more concentrated last year. Just two nations, the U.S. and China, helped drive more than half the global population growth of the wealthiest people; the next 10 markets expanded by less than the global average.
Perhaps the most significant data point regarding global wealth is the forecast: Wealth held by the richest people will rise 7.7 percent a year to $70 trillion by 2017.