Top 5 Investments For Millionaires In 2017

Investing

Top 5 Investments For Millionaires In 2017

2017 has seen global millionaire wealth grow to unprecedented levels. We reveal where they like to park their hard-earned cash.

Published on 15 November 2017

As the wealth of the world’s millionaires continues to grow, how are their portfolios changing? Consulting company Capgemini recently released their World Wealth Report 2017, which showed that the combined wealth of the world’s high-net-worth (HNW) individuals – defined as those with assets exceeding US$1 million – surged 8.2% to an all-time high of US$63.5 trillion in 2016 and is on track to reach US$100 trillion by 2025.

The report also reveals how these millionaires are allocating their assets and constructing and their investment portfolios. Some of their choices may come as a surprise. Here we share with you the top 5 places the world’s millionaires stick their money.

05.

Alternative Investments

Coming in the fifth spot is alternative investments. These can include everything from hedge funds to private equity – to name but a few. Basically, anything that isn’t a traditional investments such as stocks. Alternative investments accounted for 15.7% of HNW investors’ portfolios in Q4 of 2016, however they now merely represent 9.7% as of Q2 in 2017. This stopped a steady overall increase from 2013, where the percentage was at 10.1%.

04.

Real Estate

Real estate emerged as the fourth most popular type of investment among millionaires. Commercial and residential properties were down in Q2 of 2017, accounting for 14% of HNW investment portfolios versus 17.9% in Q4 of 2016. Do wealthy investors know something that we don’t? Since 2013, investment in real estate has dropped from 20% of investor’s portfolios.

03.

Fixed Income

The percentage of fixed income investments in millionaires’ investment portfolios has remained flat from Q4 2016 at 18%. Typically these will include investments such as bonds and CDs. When markets show more risk, investors tend to flock to fixed income investments.

02.

Cash

Sometimes cash is said to be king. Other times, it’s known as a dirty four letter word. In the minds of millionaires, it’s held highly on the list as it takes the second spot in terms of the allocation of the portfolios. Perhaps a lack of confidence in real estate or alternative investments has led to an uptick in cash holdings from 23.5% to 27.3% over the past six months.

01.

Equities

The top spot is claimed by equities. Wealthy investors increased the amount of stock investments in their portfolios from 24.8% to 31.1% in the past 6-months. Confidence is currently high as stock markets around the world continue to soar. The Nikkei 225, for example, recently closed at the highest level since 1992 and all three major US indexes recently closed at all-time highs. It begs the question when the next bubble pops, will cash be king once again?

How does Asia compare?

millionaire, portfolio, capgemini, alternative investments, fixed income, real estate, cash, equities

The composition of investment portfolios among Asia’s millionaire does differ from the global average. In the typical Asian HNW investor’s porfolio, real estate is at 18.7%, slightly up, while cash is down at 24.9% and equities are lower at 27.7%.

Interestingly, the portfolios of North American millionaires are drastically different from their global counterparts, especially when it comes to real estate, which is lower at 10.7%, and cash, which is at 20.7%. Equities are almost 10% higher though at 37.1%. Alternative investments and fixed income are on an almost even keel.

The bottom line

Today the vast majority of millionaires’ portfolios are diverse. The chart below gives a complete picture of the average asset allocation in HNW investors’ portfolios.

millionaire, portfolio, capgemini, alternative investments, fixed income, real estate, cash, equities

As we’ve shown, their holdings can range from cash to equities. However, according to Capgemini, there’s been a substantial move away from real estate and alternative investments in HNW investment portfolios, and a shift towards equities and cash.

Although there are a lot of attractive alternative and property investments out there, if markets continue to move upwards at an unprecedented rate, equities will likely continue to rule the roost for the time being.

SIGN UP