The number of high net worth investors in Australia has stopped growing and started to shrink after a turbulent year on financial markets.
For the first time in five year, their numbers fell 5000 to 440,000, according to analysts Investment Trends in the latest High Net Worth Investor Report, the largest study of Australia’s wealthiest investors.
These investors are defined as those with assets of more than $1 million ready to invest. They may be worth more than that but they have at least that amount to invest.
Investment Trends estimates the collective wealth of Australia’s high net worth individuals is $1.55 trillion, down slightly from $1.57 trillion in 2014.
The worth of less wealthy Australians is also declining. The value of median growth superannuation funds fell 2.3% in January and has continued to slide further into the red in February, according to industry analysts Chant.
A key finding of the Investment Trends anlysis is that wealthy investors are now holding cash and waiting for an opportunity to get back into the market. As at October 2015, the typical high net worth investor portfolio had 16% in cash and term deposits.
“HNW (high net worth) investors are keeping a sizeable part of their wealth in the most liquid form at the moment, despite uninspiring cash rates,” says Irene Guiamatsia, Senior Analyst at Investment Trends.
Direct shares and property make up two thirds of a typical Australian high net worth portfolio. But the slump in commodity prices and share market volatility weighed down on overall asset growth.
“The property boom of recent years certainly played a significant role in minting millionaires,” says Guiamatsia.
More than 60,000 of them indicate the main source of their fortune to be profits made from property, up from 30,000 in 2013.