Thread: World’s Rich Richer Than Ever; Wealth Growth Beats GDP Avgs

World’s Rich Richer Than Ever; Wealth Growth Beats GDP Avgs - Kenneth Rapoza - BRIC Breaker - Forbes

World’s Rich Richer Than Ever; Wealth Growth Beats GDP Avgs

Jun. 24
2011 - 12:30 am


The world's millionaires saw their wealth rise by nearly 10% last year, while world GDP rose 3.9%. Emerging Asia-Pacific outpaced Europe as home to more millionaires and is now second to North America for the highest net worth population on the planet.

The rich get richer. In fact, despite economic crisis, recessions and slowdowns, the incomes of the planet’s high net worth individuals rose more last year in percentage terms than the world’s GDP.

This week, consulting firm Capgemini and private wealth manager Merrill Lynch Wealth Management published their annual review of where the rich are. The 40 page World Wealth Report 2011 shows that the wealth of the world’s millionaires grew 9.7% in 2010, while world gross domestic output rose 5.01%, according to the International Monetary Fund.

The world’s rich have a high net worth of $42.7 trillion, roughly three times the size of the US economy. US gross domestic product in 2010 was $14.6 trillion. GDP is the main indicator of a country’s wealth and standard of living. US GDP is the highest in the world, followed by China at $5.8 trillion.

The population of high net worth individuals grew 8.3% to 10.9 million, with Asia-Pacific leading in terms of overall numbers of individuals entering the ranks of millionaire. The region saw a 9.7% increase in high net worth individuals wealth over the last year, with a total of 3.3 million people swelling the ranks. The population of rich people living in Asia-Pacific, led by China with over 535,000 millionaires, according to Capgemini, surpassed that of Europe in 2009. The gap widened in 2010 and is expected to widen further this year.

In terms of wealth rather than population numbers, Asia-Pacific’s millionaires are worth a combined $10.8 trillion compared to Europe’s high net worth assets of $10.2 trillion, according to Capgemini and Merrill Lynch’s estimates.

While Asia has been the engine of growth for the world economy, North America’s millionaires have also done well for themselves despite slow growth. High net worth individuals were worth a combined $11.6 trillion in 2010, up an impressive 9.1%. Only Asia’s wealthy assets have grown more.

The numbers are even more impressive globally for ultra-high net worth individuals, those people with net investable assets of $30 million or more. The population of ultra high net work individuals rose by 10.2% and their wealth rose the most of all, by 11.5% in 2010, roughly on par with the 2010 gains in the S&P 500. Ultra high net worth people account for less than 1% of the world’s millionaires, but hold 36% of the total estimated assets of all high net worth individuals, up from 35% in 2009.

A lot of the wealth gains came from investments in equities, as indicated by the gains in the S&P index rising equally with rich individuals’ overall wealth. By the end of 2010, high net worth individuals held about 33% of their assets in stocks, with emerging markets being a large part of their investments. Savvy investors sold out in late 2010, just before emerging markets started to turn sour. For instance, the iShares MSCI Brazil (EWZ) exchange traded fund, which tracks the BM&F Bovespa stock index, hit a high of $81.58 on Nov. 4 before steadily retreating. It’s down 12% since then.

Nevertheless, a weaker market has not hurt Brazilian millionaires too much. Brazil’s millionaire population rose 5.9% to roughly 155,400, putting Brazil in 11th place out of a list of 12 countries that are home to the most millionaires. India entered the top 12 for the first time. The US, Japan and Germany are the top three and account for 53% of the world’s millionaires, down slightly from the 53.5% registered in the 2010 World Wealth Report.