Millionaires make a comeback: Merrill Lynch

Global millionaires’ ranks increased by about 17 percent in 2009, with the Asia-Pacific region posting a 26 percent gain, according to a report by Capgemini SA and Merrill Lynch & Co.

The number of millionaire households, or those with at least $1 million in investable assets, excluding primary residences, expanded to 10 million from 8.6 million a year earlier, the firms said in their 14th annual World Wealth Report published today. Asia-Pacific, led by Hong Kong and India, now match the number of millionaires in Europe at 3 million. North America had the second-biggest increase, 17 percent, to 3.1 million, the largest number in a region.

“High-net-worth investors have emerged more cautious and conservative, but they have emerged,” Lyle LaMothe, head of U.S. wealth management for Merrill Lynch global wealth management, said in New York today.

Global wealth held by millionaires rose by 19 percent to $39 trillion after falling more than 19 percent in 2008 following the credit crisis that sent stock indexes to their worst annual losses since the Great Depression and slashed the value of real-estate holdings, hedge-fund and private-equity investments.

Last year’s gains were driven by market recovery and government stimulus efforts, the survey said. The Standard & Poor’s 500 Index rose 20 percent in 2009 after dropping 38 percent in 2008, its steepest annual decline since 1937.

Millionaire investors “warily returned to markets in cautious pursuit of returns,” LaMothe said. Equity holdings worldwide rose to 29 percent from 25 percent and fixed-income investments increased to 31 percent from 29 percent as cash and deposits dipped to 17 percent from 21 percent. Portfolio allocations to real estate stayed the same at 18 percent as residential real estate assets’ increase balanced out commercial real estate holdings’ decrease.

Wealthy investors in all regions except Latin America increased their relative share of holdings in markets outside their home regions, reversing a trend that began in 2006 of increasing investments in home countries.

“What the markets and economy destroyed in 2008 was reconstructed in 2009,” Patrick Ramsey, chief executive officer of Merrill Lynch Bank (Suisse) SA, told reporters in Zurich. “Volatility is now part of our world, and we have to learn to live with it.”

Although demand for passion investments, such as art, was still lower in 2009 than before the recession, the second half of 2009 saw an increase, fueled in part by millionaires looking at these items as investments, not just collectibles, the survey said.

Asia-Pacific assets grew 31 percent to $9.7 trillion last year, the biggest regional increase, the report said. Assets in North America advanced 18 percent to $10.7 trillion while those in Europe climbed 14 percent to $9.5 trillion.

The U.S. had 2.87 million millionaires, more than triple third-ranked Germany with 861,500, the report said. The number of millionaires in Hong Kong soared 104 percent and in India, 51 percent to 126,700.

Ultra-high-net-worth individuals with more than $30 million to invest saw their wealth rise by almost 22 percent in 2009, faster than other millionaires, according to the report, which attributed the gain to a “more effective re-allocation of assets.”

Paris-based Capgemini and Merrill Lynch, a subsidiary of Charlotte, North Carolina-based Bank of America Corp., surveyed investors in 71 countries covering 98 percent of the world’s gross national income, according to the report.

On June 10, The Boston Consulting Group reported that global wealth rose by 11.5 percent last year as assets under management increased to $111.5 trillion, close to 2007’s record $111.6 trillion. The number of millionaire households increased 14 percent to 11.2 million with Singapore having the highest proportion of millionaire households, followed by Hong Kong and Switzerland, Boston’s study said.

Related Topics: Wealth Management