Asia Pacific’s wealthy globetrotters are increasingly getting younger and more adventurous in their investment mindset. Where exactly are they deriving their income from? Mabel Tan explores.
The convergence of globalising economies has led to the emergence of a new breed of wealthy individuals, whose nomadic lifestyle has been identified as the key contributor to the success in achieving their millionaire status.
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A correlation exists between relative affluence and mobility, according to a new study by the Economist Intelligence Unit and RBC Wealth Management, which found more internationally mobile wealthy individuals (IMWIs) (33%) come from high net-worth families, compared to their home-based counterparts (20%). The ‘Wealth through the Prism of Culture and Mobility’ report surveyed 300 IMWIs, who live, work or spend more than half of their time outside their home country and have investable assets of at least $1m.
Source: RBC/EIU
The report also spotted an inverse relationship between the age of IMWIs and the proportion of those who accumulated their wealth as professionals. This reflects mobility, which tends to expose young people to less-traditional business opportunities. About 41% of IMWIs over 50 years of age reported generating their wealth as professionals, compared to 26% of those between 41 and 50, and 17% of those 40 and under. Likewise, IMWIs below 40 years old are found to have a more diverse range of income sources such as entrepreneurship and real estate investment, compared to the professional or executive experience that generated wealth for older IMWI cohorts.
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By GlobalDataAmong the regions surveyed, Asia-Pacific is home to the largest number of IMWIs below 40 years of age. Top sources of wealth include entrepreneurship (26%), professional careers (17%), real estate investments (16%), and sale of business, private equity, or as an executive in a privately-held company (12.4% each).
Source: RBC/EIU
Most IMWis however tend to remain within their home region. For example, 63% of IMWIs born in the Asia-Pacific region currently live in Singapore, Hong Kong, India or China. This attributes to the differences in IMWI behaviour and perceptions among regions.
Source: RBC/EIU
In Asia-Pacific, fewer IMWIs derive the majority of their income from their country of residence (58%), compared to their counterparts in the US (94%) and Western Europe (63%). At the same time, only one in 10 IMWIs from the region are investing most of their assets outside their country of residence or origin – lower than their mobile peers in Europe (37%) or the US (11%).
In terms of investment, a majority of Asia-Pacific IMWIs said they favor portfolios that offer steady growth (51%), followed by asset preservation (21%) and high growth (20%) – the highest among all regions surveyed. Cash flow, on the other hand, is of the lowest priority (5%) to them. This reflects their high propensity to invest heavily in real estate, with 68% of respondents in the region indicating it makes a "high" or "very high" proportion in their investment portfolios.
Other popular investment choices include domestic equities (52%), global equities (45%), cash (43%), private equity (34%), precious metals (33%) and sovereign bonds (27%). The fact that real estate is tangible compared to capital markets could be a push factor for IMWIs investing in both their home countries and abroad, the report said. While art and collectibles (24%) were found to be the lowest investment choice in their portfolios, Asia-Pacific IMWIs are placing a greater emphasis on it than their counterparts in other regions.
In the near future, Asia Pacific’s GDP is expected to eclipse OCED economies, the report said. This will bode especially well for Asia Pacific IMWIs investing in real estate and sales of businesses.
