HNWI Asset Allocation in the UK to 2015 by WealthInsightReports

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									          HNWI Asset Allocation in the
                 UK to 2015




China – The Future of HNWIs to 2015: Opportunities for Wealth Managers and Private Banks

Publication date: March, 2012.
© WealthInsight. This report is a licensed product and is not to be photocopied.
Report code: WI0030MR
TABLE OF CONTENTS


TABLE OF CONTENTS

1       Introduction ............................................................................................................................ 5
1.1       What is this Report About? ............................................................................................................ 5
2       Executive Summary ............................................................................................................... 9
3       Wealth Sector Fundamentals .............................................................................................. 11
3.1       Political Background to the Wealth Sector ................................................................................. 11
3.2       Economic Background to the Wealth Sector .............................................................................. 12
3.3       Benchmarking UK Wealth in Context .......................................................................................... 14
3.3.1 Distribution of Wealth ........................................................................................................................................ 14
4       Analysis of UK HNWI Investments ..................................................................................... 17
4.1       Analysis by Asset Classes ........................................................................................................... 17
4.1.1     Changing Trends in Liquid Assets – Equity, Fixed Income and Cash and Deposits ........................................ 18
4.1.2     Trends in Alternative Assets .............................................................................................................................. 20
4.1.3     Trends in “Art, Wine and Wheels” ..................................................................................................................... 22
4.1.4     Trends of Investments in Real Estate ............................................................................................................... 24
4.1.5     Trends of Investments in Cash and Deposits.................................................................................................... 27
4.1.6     Trends of Investments in Fixed Income ............................................................................................................ 27
4.1.7     Trends of Investments in Equity ........................................................................................................................ 28
4.1.8     Trends of Investments in Business Interest ...................................................................................................... 28
4.2       Analysis of Foreign Investments ................................................................................................. 30
4.2.1     Trend of Investments in Rest of Europe ............................................................................................................ 32
4.2.2     Trend of Investments in Asia-Pacific ................................................................................................................. 32
4.2.3     Trend of Investments in North America ............................................................................................................. 33
4.2.4     Trend of Investments in Latin America, the Middle East and Africa.................................................................. 33
4.3       Analysis of UK Ultra HNWI Investments...................................................................................... 34
4.4       Case Study: UK towns with highest average house prices ....................................................... 36
5       Appendix ............................................................................................................................... 38
5.1       Cities, Counties and Regions....................................................................................................... 38
5.2       Education ...................................................................................................................................... 39
5.3       Philanthropy .................................................................................................................................. 39
5.4       Demand for Intergenerational Wealth Transfer and Younger Clientele .................................... 40
5.5       Regulatory Environment in the UK .............................................................................................. 40
5.5.1     Regulations on Non-domiciled Residents ......................................................................................................... 41
5.5.2     Banking Regulations .......................................................................................................................................... 41
5.5.3     Regulations on Taxes ........................................................................................................................................ 42
5.5.4     Regulations on Fund Management ................................................................................................................... 44
5.5.5     Regulations on Foreign Investment ................................................................................................................... 44
5.5.6     Regulations on Real Estate ............................................................................................................................... 44
5.5.7     Regulations on Foreign Investment in Real Estate ........................................................................................... 45
5.5.8     Regulations on Wealth Management and Private Banking ............................................................................... 45


HNWI Asset Allocation in the UK to 2015
© WealthInsight. This report is a licensed product and is not to be photocopied.                                                                                       Page 1
TABLE OF CONTENTS


5.5.9 Regulations Related to Investment and Employment ....................................................................................... 45
5.6       Key Economic Trends and Drivers .............................................................................................. 46
5.6.1     GBP to USD Moving Annual Average Exchange Rate ..................................................................................... 46
5.6.2     Real GDP Growth .............................................................................................................................................. 47
5.6.3     Per Capita GDP ................................................................................................................................................. 48
5.6.4     Gross Savings Rate as a Percent of GDP ........................................................................................................ 49
5.6.5     Domestic Market Capitalization ......................................................................................................................... 50
5.6.6     Housing Price Index .......................................................................................................................................... 51
5.6.7     Commodity Index ............................................................................................................................................... 52
5.6.8     Foreign Direct Investment ................................................................................................................................. 53
5.6.9     Investments of FII‟s in Equity Products ............................................................................................................. 54
5.6.10    Inflation Rate ..................................................................................................................................................... 55
5.6.11    Repo Rate.......................................................................................................................................................... 56
5.6.12    Balance of Payments ......................................................................................................................................... 57
5.6.13    Government Debt .............................................................................................................................................. 58
5.6.14    Stock Market Performance ................................................................................................................................ 59
5.6.15    HNWI Wealth vs. GDP Ratio ............................................................................................................................. 60
5.6.16    Capital Formation as Percent of GDP ............................................................................................................... 61
5.6.17    Disposable Income as Percent of GDP ............................................................................................................. 62
5.7       Background of the UK .................................................................................................................. 63
5.7.1 Political and Economic Background .................................................................................................................. 63
5.7.2 Social Background ............................................................................................................................................. 64
5.7.3 Technological Background ................................................................................................................................ 65
6      About WealthInsight ............................................................................................................ 66




HNWI Asset Allocation in the UK to 2015
© WealthInsight. This report is a licensed product and is not to be photocopied.                                                                                             Page 2
TABLE OF CONTENTS


LIST OF TABLES

Table 1: HNWI Wealth Band and Group Definitions ............................................................................................. 6
Table 2: HNWIs – HNWI Holdings Growth (%), 2007-15 ................................................................................... 18
Table 3: HNWIs – Liquid Asset Composition (%), 2007-15 ................................................................................ 19
Table 4: HNWIs – Trends of Investments in Alternative Assets (%), 2007-15 ................................................... 21
Table 5: HNWIs – Alternative Asset Composition (%), 2007-15 ........................................................................ 21
Table 6: HNWIs – Trends in “Art, Wine and Wheels”, 2006-10 .......................................................................... 22
Table 7: HNWIs – Real estate performance per region, 2007-2015 .................................................................. 25
Table 8: HNWIs – Trends in UK HNWI foreign real estate investment per country, 2007-2015 ........................ 26
Table 9: HNWIs – Composition (%) of Foreign Assets, 2007-15 ....................................................................... 31
Table 10: HNWIs – % Growth, 2007-15 – Y Axis ............................................................................................... 31
Table 11: HNWIs – % Foreign Allocation, 2007-15 – X Axis .............................................................................. 31
Table 12: UHNWIs – Allocations and Share of HNWI Assets, 2011 .................................................................. 35
Table 13: UHNWIs – UK towns with highest average house prices ................................................................... 37
Table 14: Largest 10 UK cities by population and number of UHNWIs .............................................................. 39
Table 15: GBP to USD Moving Annual Average Exchange Rate, 2006–15 ...................................................... 46
Table 16: Real GDP Growth Rate, 2006–15 ...................................................................................................... 47
Table 17: GDP Per Capita, 2006–15 .................................................................................................................. 48
Table 18: Gross Savings as a % of Real GDP, 2006–2015 ............................................................................... 49
Table 19: Domestic Market Capitalization, 2006–10 .......................................................................................... 50
Table 20: Housing Price Index, 2006–10 ............................................................................................................ 51
Table 21: Commodity Indices, 2006–15 ............................................................................................................. 52
Table 22: Foreign Direct Investments, 2006–2015 ............................................................................................. 53
Table 23: Investments of FIIs in Equity Products, 2006–10 ............................................................................... 54
Table 24: Inflation Rate, 2006–15 ....................................................................................................................... 55
Table 25: Repo Rate, 2006–15 ........................................................................................................................... 56
Table 26: Balance of Payments, 2006-10........................................................................................................... 57
Table 27: Government Debt to GDP, 2006–10................................................................................................... 58
Table 28: Stock Market Performance, 2006–10 ................................................................................................. 59
Table 29: HNWI Wealth vs. GDP Ratio, 2006–15 .............................................................................................. 60
Table 30: Capital Formation as % of GDP, 2006-15 .......................................................................................... 61
Table 31: Disposable Income as % of GDP, 2006-15 ........................................................................................ 62




HNWI Asset Allocation in the UK to 2015
© WealthInsight. This report is a licensed product and is not to be photocopied.                                                                               Page 3
TABLE OF CONTENTS


LIST OF FIGURES

Figure 1: HNWI Wealth Band Definitions .............................................................................................................. 7
Figure 2: Map of the United Kingdom ................................................................................................................... 8
Figure 3: HNWIs in the UK, 2007-15 .................................................................................................................. 14
Figure 4: HNWIs – UK vs. RoW .......................................................................................................................... 15
Figure 5: Asset Price Performance, 2007-11...................................................................................................... 16
Figure 6: HNWIs – Asset Class Composition, 2007-15 ...................................................................................... 17
Figure 7: HNWIs – Changing Trends in Total Liquid Assets (as % of Total Assets), 2007-15 .......................... 18
Figure 8: HNWIs – Liquid Assets Composition (US$ Billions), 2007-15 ............................................................ 19
Figure 9: HNWIs – Trends of Investments in Alternative Assets (in US$ Billion), 2007-15 ............................... 21
Figure 10: HNWIs – Trends in “Art, Wine and Wheels”, 2006-10....................................................................... 22
Figure 11: HNWIs –Foreign Asset Allocation vs. Growth, 2011-2015 ................................................................ 30
Figure 12: HNWIs – Global Distribution of Foreign Investments, 2007-15 ......................................................... 32
Figure 13: UHNWIs – Asset Class Composition, 2007-15 ................................................................................. 34
Figure 14: GBP to USD Moving Annual Average Exchange Rate, 2006–15 ..................................................... 46
Figure 15: Real GDP Growth (%), 2006–15 ....................................................................................................... 47
Figure 16: GDP Per Capita, 2006–15 ................................................................................................................. 48
Figure 17: Gross Savings as a % of Real GDP, 2006–2015 .............................................................................. 49
Figure 18: Domestic Market Capitalization, 2006–10 ......................................................................................... 50
Figure 19: Housing Price Index, 2006–10 .......................................................................................................... 51
Figure 20: Commodity Indices, 2006–15 ............................................................................................................ 52
Figure 21: Foreign Direct Investments, 2006–2015............................................................................................ 53
Figure 22: Investments of FIIs in Equity Products, 2006–10 .............................................................................. 54
Figure 23: Inflation Rate, 2006–15 ..........................................................................................................
								
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