Good times

From the Wall Street Journal:

Ranks of Rich in U.S. Grow at Faster Pace
By DAISY MAXEY
June 28, 2007; Page D6

The ranks of the richest Americans expanded last year at an increased pace, driven by a strong economy, but that growth is expected to moderate in coming years, according to a new study.

The 11th annual World Wealth Report, compiled by Merrill Lynch & Co. and Capgemini Group, shows that in 2006, the U.S. population of high-net-worth individuals — those with at least $1 million in investible assets, excluding their primary residences — rose 9.4% to 2.92 million. In 2005, the same population increased 6.8% to 2.67 million.

Robert McCann, president of Merrill Lynch Global Private Client Group, attributed the increased pace of wealth generation to gains in economic output and continued growth in the world’s stock markets, two primary drivers of wealth creation.

World-wide, the number of wealthy individuals climbed to 9.5 million in 2006, an 8.3% increase from 2005, according to the report. The combined wealth of high-net-worth individuals world-wide increased to $37.2 trillion, up 11.4% from 2005.

The number of ultra-high-net-worth individuals — those with at least $30 million in investible assets — increased by 11.3% to 94,970, in 2006, according to the report.

However, the report forecasts slower world-wide growth going forward than that seen this year. “Looking ahead, mature markets like the U.S. are expected to act as an anchor on the world economy as moderate growth rates settle in,” the report said. It projects that the wealth of high net-worth individuals will reach $51.6 trillion by 2011, growing at an annual rate of 6.8%.
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The wealthy shifted their investment strategies in 2006, according to the report. “More money went to real estate at the expense of alternative investments,” such as hedge funds and foreign currencies, says Mr. McCann. That shift was driven primarily by commercial real estate and real-estate investment trusts.

However, the report projects that this is a temporary tactical move rather than a long-term asset allocation shift, and projects a greater allocation to alternative investments in 2008.