More are in the money

DUBAI, United Arab Emirates – The ranks of the world’s millionaires swelled by more than half a million people last year to 8.7 million, according to a study released Tuesday.

Experts at the financial services firm Merrill Lynch &Co. Inc. and consultancy Capgemini, which conducted the research, credited strong global economic growth as well as solid market performance but said they expected some slowing of those forces in coming years – and thus a reduction in the growth of millionaire echelons.

The study, the 10th annual World Wealth Report, said the number of millionaires grew more than 6 percent last year and has nearly doubled since 4.5 million millionaires were counted in 1996.

The wealth of the millionaires – who are defined as people with financial assets of at least $1 million, excluding their primary residences – totaled $33.3 trillion in 2005, up 8.5 percent from $30.7 trillion in 2004, the report said.

It said that there were 85,400 people with financial assets of more than $30 million in 2005, a 10.2 percent increase from 2004. These so-called ultra high net worth individuals numbered 77,500 in 2004.

“Economic growth and market capitalization were the two main drivers of wealth creation,” Robert McCann, executive vice president of Merrill Lynch, told a news conference in New York.

This, he said, has led to the assets of wealthy families growing about 8 percent a year in the past decade. McCann said, however, that this was expected to slow to about 6 percent in the next few years as central banks raise interest rates, higher oil prices affect consuming nations and a slowing Chinese economy has a “ripple effect” on other Asian nations.

The higher wealth accumulation in 2005 also reflected more aggressive investing, the report said.

It said that millionaires increased their holdings of stock to 31 percent of their portfolios in 2005, up from 30 percent the year before, and of alternative investments such as hedge funds and commodities to 22 percent in 2005, up from 20 percent in 2004. They slightly reduced holdings of real estate and cash, while fixed income investments were unchanged at 21 percent.

The report found some shift away from investing in North America and Europe and toward the Asia-Pacific region.

North America remained the wealthiest region, with 2.9 million millionaires and $10.2 trillion in wealth. But it was the first year in three that the growth in North America’s high net worth population – 6.9 percent in 2005 – failed to exceed the previous year’s growth – 9.9 percent in 2004.

The number of millionaires grew 4.5 percent in Europe to 2.8 million; 7.3 percent in Asia-Pacific to 2.4 million; 9.7 percent in Latin America to 300,000; and nearly 12 percent in Africa to 100,000.

The red-hot Middle East saw nearly 10 percent growth in millionaires with record oil revenues and soaring stock markets pushing 300,000 people over the million-dollar mark.

“This is becoming a very attractive place to invest,” said Mones Bazzy, Merrill Lynch’s head of Middle East private banking in Dubai.