Global Wealth Now Spans Emerging Markets and Savvy Investors

In a report released in late June, Merrill Lynch and CapGemini have found that the 10th anniversary of the World Wealth Report, also showed a significant increase in high net worth individuals in the emerging markets of the Asian Pacific, Latin America and Middle East. For the first time, the U.S. HNWI (high net worth individuals) population failed to exceed the previous year's gains. Perhaps the greatest contributor to the lack of growth exhibited in the U.S. market was the fact that investment portfolios of U.S. HNWIs are lacking in international investments. The strong financial performance of overseas markets has created international market opportunities that U.S. portfolios have been slow to capitalize on, resulting in slower HNWI growth. "Real GDP growth and market capitalization were the two main drivers of wealth creation, making 2005 a year of robust but decelerating growth for some regions following two consecutive years of strong, global performance," stated Robert McCann, Vice Chairman and President of Merrill Lynch's Global Private Client Group. This would explain the higher growth rates for individuals in the emerging markets of Russia, India, and Brazil. Primary areas of investment for U.S. HNWIs remained focused in equity, real estate, and bonds. However, the continued increase in returns in the emerging markets, are persuading many to transfer assets away from the mature markets and into emerging markets for the foreseeable future. The portfolios of U.S. HNWIs are more domestically focused than those of their international peers, and as a result, the U.S. HNWIs missed out on some of 2005 most spectacular gains. A result that was evident when the numbers were tallied at year end. South Korea HNWI grew most dramatically at 21.3%; India's HNWI increased at 19.3% and Russian HNWIs numbers rose 17.4%.