For the majority of millionaires, investments across an array of asset classes are integral to maintaining and growing their substantial wealth.
PBI’s parent company, data analysis provider GlobalData, has studied HNW investments in 25 countries, across Asia-Pacific, Europe and North America, plus South Africa and UAE to determine the weighting of different assets in millionaires’ portfolios.
Here is a breakdown of the research’s findings.
Equities is biggest investment class for millionaires
Accounting for 26% of HNW portfolios, equity is the most prevalent asset class among millionaires’ investments.
Of this figure, 9.4% is invested in equities directly, with the remainder in equity funds or ETFs.
Notably, some 42% of North American millionaires’ investments are held in equities, over 60% greater than the global average. This to be expected considering the presence of the world’s largest and most famous companies being based in this market.
Bonds also substantial area of investment for millionaires
Globally, bonds account for over 20% of HNW investors’ portfolios. These are spread fairly evenly between government and corporate bonds, as well as bonds ETFs and other funds.
Unlike other investments, the percentage of millionaires’ portfolios held in bonds does not vary greatly from one region to the other.
Against the global percentage of 20.6%, the figure stands at 20.8, 20.9 and 20.1 in Asia-Pacific, Europe and North America respectively.
Property investments – regional disparity
Globally, 18.3% of HNW investors’ wealth is held in property, be it direct holdings, property funds or real estate investment trusts (REITs).
There is a good deal of regional variation in this area, with Asia-Pacific millionaires’ investments in property tallying 20.5%, against 17.7% in Europe and just 13.1% in North America.
The Asia-Pacific region is home to some of the countries with the highest potential for economic expansion, and so it follows that property is a more popular area of investment as cities and infrastructure grow.
For example, 25.8% of UAE millionaires’ investments is held in property, against only 11.7% in the US.
How keen are millionaires on commodities and alternatives investments?
Commodities have received a good deal of attention of late with gold currently up 16.2% in 2019, as investors seek a hedge against volatility and geopolitical risk.
Twelve per cent of millionaires’ investments are held in commodities, with massive variation from one country to the next.
In Malaysia, for instance, the figure is a well above average 15.1%, whereas in Indonesia it stands at only 2.1%.
Broadly speaking, however, commodities are more popular in Asia-Pacific and Europe than in North America, as with property.
In an uncertain world and an economy cycle showing late-cycle fatigue, alternative investments, such as hedge funds and private equity, are the least popular asset classes, amounting to 6.2% of millionaires’ portfolios.