Rich just got richer

Weekend Witness - - News -

NEW YORK — The rich grew richer last year, even as the world en­dured the worst re­ces­sion in decades.

As­tock mar­ket re­bound helped the world’s ranks of mil­lion­aires climb 17% to 10 mil­lion, while their col­lec­tive wealth surged 19% to $39 tril­lion, nearly re­coup­ing losses from the fi­nan­cial cri­sis, ac­cord­ing to the lat­est Mer­rill Lynch-Capgem­ini world wealth re­port.

Stock val­ues rose by half, while hedge funds re­cov­ered most of their 2008 losses in a year marked by govern­ment stim­u­lus spend­ing and cen­tral bank eas­ing.

“We are al­ready see­ing dis­tinct signs of re­cov­ery and, in some ar­eas, a com­plete re­turn to 2007 lev­els of wealth and growth,” Bank of Amer­ica Corp wealth man­age­ment chief Sal­lie Krawcheck said.

The fastest growth in wealth took place in In­dia, China and Brazil, some of the hard­est hit mar­kets in 2008. Wealth in Latin Amer­ica and the Asia-Pa­cific soared to record highs.

Asia’s mil­lion­aire ranks rose to three mil­lion, match­ing Europe for the first time, paced by a 4,5% eco­nomic ex­pan­sion. Asian mil­lion­aires’ com­bined wealth surged 31% to $9,7 tril­lion, sur­pass­ing Europe’s $9,5 tril­lion.

In North Amer­ica, the ranks of the rich rose 17% and their wealth grew 18% to $10,7 tril­lion.

The United States was home to the most mil­lion­aires in 2009 — 2,87 mil­lion — fol­lowed by Ja­pan with 1,65 mil­lion, Ger­many with 861 000, and China with 477 000.

Switzer­land had the high­est con­cen­tra­tion of mil­lion­aires: nearly 35 for ev­ery 1 000 adults.

Yet, as port­fo­lios bounced back, in­vestors re­mained wary af­ter a col­lapse that erased a decade of stock gains, fu­elled a con­trac­tion in the global econ­omy and sent un­em­ploy­ment soar­ing.

The re­port, based on sur­veys with more than 1 100 wealthy in­vestors with 23 firms, found that the rich were well served by hold­ing a broad range of in­vest­ments, in­clud­ing com­modi­ties and real es­tate.

“The wealthy al­lo­cated, as op­posed to con­cen­trated, their in­vest­ments,” Mer­rill Lynch head of U.S. wealth man­age­ment Lyle LaMothe said in an in­ter­view.

Mil­lion­aires poured more of their money into fixed-in­come in­vest­ments seek­ing pre­dictable re­turns and cash flow. The chal­lenge ahead for bro­kers is con­vinc­ing clients to move off the side­lines and pur­sue riskier, more fruit­ful in­vest­ments.

“There is still a hes­i­tancy,” LaMothe said. “Liq­uid­ity is in­cred­i­bly im­por­tant and peo­ple need cash flow to pre­serve their life­style — but they want to re­place that cash flow in a way that does not in­crease their risk pro­file.”

The re­port found that in­vestor con­fi­dence in ad­vis­ers and reg­u­la­tors re­mains shaken. The rich are ac­tively man­ag­ing their in­vest­ments, seek­ing cus­tomised ad­vice and de­mand­ing full dis­clo­sure about the se­cu­ri­ties they buy.

There were signs that in­vestors were shak­ing off their con­cerns. Fam­i­lies that kept money closer to home dur­ing the cri­sis be­gan shift­ing money to for­eign mar­kets, par­tic­u­larly the de­vel­op­ing na­tions.

North Amer­i­can and Euro­pean in­vestors are ex­pected to in­crease their ex­po­sure to Asian mar­kets, which are pro­jected to lead the world in eco­nomic ex­pan­sion. Europe’s wealthy are seen in­creas­ing their U.S. and Cana­dian hold­ings. More wealthy clients also are tak­ing a harder look at large com­pa­nies that pay healthy div­i­dends, as an al­ter­na­tive to bonds and their ra­zor-thin yields.

“In­vestors are open to ar­eas they hadn’t thought about be­fore as they try to pre­serve their abil­ity to be phil­an­thropic, to pre­serve their life­style,” LaMothe said. “To me, the re­port un­der­scored clients are in­volved and they’re not in­clined to stay in one per­cent sav­ings ac­counts.” — Reuters.

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