Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Several homes, shares and, of course, luxury: How the uber-wealthy invest
Ever wonder how the world’s richest people invest their wealth? Besides property – the average ultra-high-net-wealth investor (UHNWI) owns more than three homes – recent research shows this cohort is largely focussed on equities, although they save plenty of room for art and other luxury investments.
Knight Frank’s 2023 Wealth Report looks at how UHNWIs – people with a net worth of more than $30 million, including their primary residence – allocate their wealth, revealing a large reliance on property and other investment segments most Australians are familiar with, as well as some they may not be.
The residential component of the ultra-high-net-worth definition is a big draw, according to a report and data visualisation from Visual Capitalist based on the Wealth Report. The average UHNWI owns 3.7 homes, and primary and secondary homes make up 32 per cent of their total global wealth (see table).
Meanwhile, investments in stocks account for nearly 20 per cent of UHNWI wealth, although the share increases for those in the Americas, who have the highest share of wealth in equities at 33 per cent, as well as in Europe (28 per cent) and Asia (26 per cent).
Private equity and venture capital make up 6 per cent of these investors’ total wealth on average, the Knight Frank data showed. And the average private equity investment ranges from $1.8 million to $6.9 million for UHNWIs, according to a separate report by Campden Wealth and Titanbay.
Growing in number and wealth
The number of ultra-rich individuals worldwide has steadily climbed, reaching about 579,000 people in 2022; it’s expected to grow 29 percent over the next five years, to 744,000, according to the Visual Capitalist report. “New York, Tokyo and San Francisco are home to the most ultra-rich individuals worldwide.”
The report pointed out that this growth of the uber-affluent will translate to increased demand for real estate, equities and luxury items, given these investment patterns.
“Investments of passion” – luxury items including art and classic cars that tend to retain their value over time – comprise, on average, 3 per cent of total wealth for the ultra-rich, the Visual Capital report stated. In 2023, nearly 60 per cent of this cohort expressed plans to purchase art (see table).
UHNWIs’ investments in all 10 luxury segments increased in value over 2022 despite an economic environment that proved bruising for most asset classes, with the S&P 500 falling nearly 20 per cent. The art market saw the most price appreciation of luxury items, with prices up 29 per cent over the year, followed by luxury cars (25 per cent) and watches (18 per cent).
The Knight Frank report is based on a global survey of more than 500 wealth managers, family offices and private bankers overseeing a combined $2.5 trillion in assets.
