Aussies hop to the front of wealth ranks

SYDNEY - Australians are ascending to the world's richest ranks at nearly twice the rate of the rest of the globe.

And, unlike many of their less cashed-up countrymen, these new multi-millionaires have not relied on real estate to build their fortunes.

There were 134,000 people in Australia defined as "high net worth individuals" (HNWIs) last year, up by 17,000 or 15 per cent on the year before, says the just-released 2005 World Wealth Report.

On average those people are worth US$3.15 million ($4.43 million) and together their wealth comes to US$422 billion. HNWIs are those with financial assets of more than US$1 million.

Australia's growth in the rich stakes outpaced the global average last year. The number of HNWIs in the world grew by 600,000, or 8.2 per cent, to 8.3 million, with an average wealth of US$3.71 million.

Considered together, they're worth US$30.8 trillion - about a quarter of the world's wealth.

The report is produced by the financial services groups Merrill Lynch and Capgemini as a tool for better understanding the investment habits and needs of rich and ultra-rich investors.

Merrill Lynch Global Private Client head Tom Alexy said Australia's strong economy - boosted by Chinese demand for raw materials - helped the richest investors to grow their wealth.

"Strong GDP growth and healthy consumer confidence contributed towards Australia's continued strong performance in 2004," Alexy said.

"An increase in Australia's GDP of 3.5 per cent, and an increase of 23 per cent in the Australian Stock Exchange, combined to provide the momentum of 2004's strong HNWI growth."

One of the notable trends in Australia last year was a move away from real estate.

HNWIs assigned 17 per cent of their investments to real estate in 2003, but only 13 per cent last year.

Equities made up 34 per cent, fixed income accounted for 27 per cent, 12 per cent was in cash and the rest in the hottest- performing sector of alternative investments - an area which includes everything from private equity to collectible cars.

Merrill Lynch first vice-president (investments) Peter Opie said HNWIs were notable for keeping their investment mixes constant and not trying to time the market.

However, there was also a growing appeal in private equity.

"The best-performing asset class in the world in 2004 was private equity," he said. "And private equity is becoming more important in the HNWI investment portfolio."

While access to private equity investment was limited for smaller investors, there were chances to get into the sector through new products such as listed funds set up to pursue private equity opportunities.

HNWIs are divided into three groups - the "ultra-high net worth" group with more than US$30 million at their disposal, the "mid-tier millionaire" with between US$5 million and US$30 million, and the so-called "millionaire next door" with US$1 million to US$5 million.

While Australia's HNWI are mostly in the lowest category, with 121,000 estimated "millionaires next door", Merrill Lynch is focusing worldwide on the "mid-tier" category as a new and under-serviced market to establish a new client base.

The report estimates there are 12,000 people in the mid-tier in Australia and 1000 in the ultra-high net worth category.

More Money

134,000 Australians are defined as high net worth individuals.

On average, they are worth US$3.15 million.

All together, their wealth comes to US$422 billion.

- AAP