KUALA LUMPUR: High-net-worth individuals' (HNWIs') total wealth climbed to US$86.8 trillion in 2023, a 4.7 per cent rise.
This historic high was driven by a rebound in the global economic outlook, according to the World Wealth Report 2024 published by Capgemini Research Institute on Wednesday.
HNWIs are people who, after deducting their principal residence, collectibles, consumables, and consumer durables, have investable assets of US$1 million or more. They are divided into three wealth categories: millionaires next door (US$1–5 million), mid-tier millionaires (US$5–30 million), and ultra-HNWIs (US$30 million or more).
In the next 20 years, a sizable intergenerational wealth transfer of more than US$80 trillion is anticipated, according to the analysis.
In addition, two-thirds of HNWIs intend to pursue future growth prospects by increasing their private equity investments in 2024.
The report stated that in 2023, there would be 22.8 million HNWIs worldwide, an increase of 5.1 per cent despite market instability. The increase undoes the downward trend from the previous year and resumes the upward trend in HNWI wealth and population.
Capgemini observed that asset allocations are moving from wealth preservation to growth as HNWI growth thrives.
Cash holdings have normalised to 25 per cent of portfolio totals as of early 2024, down from a multi-decade high of 34 per cent in January 2023. Just over 1.0 per cent of all HNWIs are ultra-HNWIs, yet they control more than 34 per cent of all HNWI wealth.
The strongest HNWI recovery was seen in North America, where wealth increased by 7.2 per cent and population increased by 7.1 per cent. Resilient economies, declining inflation, and a strong surge in US equities were the main drivers of this expansion.
More moderate improvements were recorded by other regions: Europe had 3.9 per cent and 4.0 per cent growth in wealth and population, respectively, while the Asia-Pacific area witnessed rises of 4.2 per cent and 4.8 per cent, respectively.
3,119 HNWIs—including over 1,300 ultra-HNWIs—from 26 key wealth markets in North America, Latin America, Europe, the Middle East, and the Asia-Pacific area responded to the Capgemini 2024 Global HNW Insights Survey.