The overall financial wealth of high net worth individuals fell by 1.7 per cent globally in 2011 to stand at $42 trillion, according to the RBC/Capgemini World Wealth Report 2012.

The overall financial wealth of high net worth individuals fell by 1.7 per cent globally in 2011 to stand at $42 trillion, according to the RBC/Capgemini World Wealth Report 2012.

The population of the $1 million - $5 million segment, which represents 90 per cent of all HNW individuals, increased both in numbers (by 1.1 per cent) and wealth (by 0.8 per cent), while the numbers and wealth of the population with over $5 million fell.

In other key findings of the report, Asia-Pacific has overtaken North America as the largest HNW market in terms of population. The region’s HNW population expanded by 1.6 per cent in 2011 and hit 3.37 million - signifying a growth rate of 11 per cent over two years.

However, North America maintains its position in terms of overall HNW wealth, representing $11.4 trillion.

Capgemini’s annual World Wealth Report is a global benchmark for tracking HNW individuals and identifying the most striking trends in the wealth management industry. This year marks its sixteenth edition and for the first time was conducted in association with the Royal Bank of Canada Wealth Management. It was previously produced with Bank of America Merrill Lynch.

Besides data on the population of HNW individuals and regional trends, the report also highlighted issues such as the rising cost of running private wealth. For example, in 2010, the average cost/income ratio of wealth management rose by 0.8 percentage points from the previous year to 79.8 per cent, having been at 76.8 per cent in 2008.

Asia’s ascent

“It is significant that for the first time this year there are now more HNW individuals in Asia-Pacific than any other region,” said George Lewis, group head at RBC Wealth Management. “However, losses in key markets such as Hong Kong and India meant that wealth contracted in Asia-Pacific overall.”

While it was only last year that India became the twelfth largest country in terms of its HNW population, the size of its HNW populace has “dropped significantly” and the country is now replaced by South Korea.

The Middle East bucked the overall downward trend following a “robust” wealthy population growth rate compared to other regions. Its HNW population grew by 2.7 per cent to 0.5 million (the same as Latin America) and wealth crept up by 0.7 per cent to $1.7 trillion.

In terms of what drove wealth creation last year, investors favored capital preservation by means of cash and fixed income, Paul Patterson, head of global trust at RBC explained at a media briefing on the report this morning.

Meanwhile, volatility - largely influenced by European concerns - caused investors to opt for safe-haven assets. At the same time, however, asset classes experienced “mixed results,” with poor equity and real estate performance.