Australia’s high net worth indivduals, those with $1 million or more to invest, are growing in number and have started changing tactics.
The Investment Trends 2013 High Net Worth Investor (HNW) Report shows the number of high net worth investors in Australia jumped 8% to 400,000 in 2013 from 370,000 in 2012.
They collectively hold nearly $1.4 trillion in investable assets.
And these high end investors have started reinvesting their cash reserves.
In 2013, the big investors allocated a larger proportion of their funds into direct listed shares and less into cash and term deposits compared to 2012.
“We find HNW investors to be leading indicators for what the general investor population will do,” said Investment Trends Senior Analyst Uwe Helmes.
“While the general population continued to accumulate cash reserves in 2013, according to RBA figures, HNW investors were ahead of the curve with a quarter of them already in the process of re-investing their excess cash.”
The proportion of assets invested in cash and term deposits declined in 2013 for the first time since 2009 (from 20% to 16%).
They allocated a larger proportion of their assets into direct shares (from 26% to 32%) to levels last seen in 2010.
This was driven by both more high net worth investors going into direct shares (90%, up from 85%) and a rise in the average amount invested ($1.15 million among those investing in direct shares, up from $950,000 in November 2012).
With the improvement in confidence, the momentum towards defensive assets observed over the previous four years is finally reversing.
Since 2008, an increasing proportion of high net worth investors have been investing for income, while fewer have been chasing capital gains. This remains the case but some appetite for capital growth is returning.
Global investment exposure has increased with considerable additional interest in North America
“Wealthy investors are showing increasing interest in investing globally,” said Uwe Helmes.
“Half of all high net worth investors have some form of international investment, up from just 40 per cent in 2009. In particular, interest in the United States and more broadly North America has increased over the last couple of years, with 8 per cent of HNW investors intending to start investing there over the next 12 months.”
Investment Trends surveyed 2,459 Australian high net worth investors, who collectively hold nearly $8 billion in investable assets, including 100 ultra-high net worth investors with more than $10 million to invest.
This chart shows the increasing number of high net worth investors in Australia: