Seriously rich now number more than seven million

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Some 180,000 people joined an exclusive club last year - the club of select individuals holding assets of more than $1 million (SFr1.75 million), according to a report presented in Zurich.

It revealed that more than 7.2 million people worldwide, about the population of Switzerland, last year held some $27 trillion in wealth, up from SFr25.5 trillion in 1999.

The details are contained in the World Wealth Report 2001 produced by bankers Merrill Lynch and the consulting firm Cap Gemini Ernst and Young.

The report says that the 180,000 rise in dollar millionaires last year – they are known in the trade as “High Net Worth Individuals” (HNWI) – was a far cry from the dramatic increase of over a million in 1999.

Although it is not clear exactly how many millionaires there are in Switzerland, the country certainly has its fair share.

“In Switzerland, we have very many wealthy individuals and with the trend of new companies going to the stock exchange, a lot of new dollar millionaires have been created,” said Markus Bischofberger, managing director of Merrill Lynch International in Zurich.

Bischofberger told swissinfo that the six per cent increase in the wealth of the rich last year was well below the 18 per cent registered in 1999.

One reason was because, although gross domestic product (GDP) surged globally, particularly in the first six months, stock market values fell sharply after a strong start.

In the first three months of 2000, buoyed by the strength of economic growth in the second half of the previous year, rising stock market values fuelled asset growth of the wealthy, creating more than 260,000 new millionaires.

However, by the end of the year, global stock markets had plummeted, ending the short ride of about 80,000 millionaires who had lost their HNWI status.

“Many of these millionaires had invested in new economy companies and in technology stocks and these investments dropped a lot in value,” Bischofberger told swissinfo.

Given the events of 2000, the authors of the report have adjusted their estimates of growth in HNWI wealth over the next five years downwards to eight per cent a year, reaching $39.7 trillion in 2005.

Over the next three years, they feel that the rich will turn increasingly to invest in specialised products. Some of these are aimed at reducing risk or enhancing returns on conventional investments.

“Many investors realised that over the past couple of years, they had too many stocks in their portfolios and a lot started to put their money in alternative investments and in structured products,” Bischofberger told swissinfo.

The report says that specialised products have “substantial potential” but it will be realised only if providers can increase investors’ knowledge about their benefits and overcome the perception that they are simply too risky.

swissinfo with agencies