North America holds 40% of world's personal wealth
A new report from The Boston Consulting Group (BCG) reveals that global personal financial wealth grew 12% to $201.9 trillion in 2017. North America remained the richest region, holding a 40% share, while Western Europe came in second with 22%.
With strong world economies and a lack of significant economic or geopolitical disasters, it’s unsurprising that personal wealth grew strongly in 2017. In the 2018 edition of its Global Wealth report, The Boston Consulting Group dishes out the numbers on personal wealth across various regions. The report reveals that Asian personal wealth is growing fastest, while globally, the richest segments are seeing the biggest gains.
According to the report, North American residents hold about 40% of global wealth, while Western Europeans have 22%. Though the West holds 62% of personal wealth, personal wealth in Asia is seeing the strongest growth, with a 19% increase in 2017. And though the wealth of all segments grew last year, the wealth of the richest segments increased at a higher rate: the share of global wealth held by millionaires increased to almost 50% in 2017 from 45% in 2012, driven by the gains of higher-wealth individuals.
Global personal financial wealth grew 12% to $201.9 trillion in 2016, according to BCG. The growth rate was more than double that of last year’s 4%. According to the report, the drivers of growing personal wealth have been the bull markets in most major economies, as well as the significant strengthening of most major currencies against the US dollar.
60% ($121.6 trillion) worth of assets were of the ‘investable’ variety, including equities, investment funds, currency and deposits, and bonds. The remaining 40% were low-liquidity assets like pensions, life insurance, and equity in unquoted firms.
The report predicts that personal wealth could rise to a compound annual growth rate (CAGR) of 7% from 2017-2022 if the current expansion pattern continues. However, in a worst-case scenario where geopolitical threats become real and global economic development lags, the five-year CAGR could drop to less than 1%.
As mentioned above, the upper-most wealth segments saw their fortunes increase at a higher rate than other segments. The segments of Lower High Net-Worth Individuals (HNWIs) ($1-20 million), Upper HNWIs ($20-100 million), and Ultra High Net-Worth Individuals (UHNWIs) (over $100 million) grew their share of the global wealth pot to almost 50% in 2017, up from 45% in 2012.
In 2017, Upper HNWIs and UHNWIs held more than $26 trillion of investable wealth globally. US residents held almost a third of this liquid wealth (30%) – the largest portion held by any one country.
Around the world, the share of wealth held by Upper HNWIs and UHNWIs ranged from 47% in Hong Kong to only 8% in Japan, reflecting the relative higher and lower levels of economic inequality within countries. Nevertheless, BCG expects the wealth of those with more than $20 million in assets to grow the fastest across all regions.
Regional breakdown
North America remained the richest region in terms of personal wealth, expanding 8% to $86.1 trillion in 2017, with 55% located in investable assets. Wealth in North America was highly concentrated in the over-$5 million segment, who held a staggering 42% of investable wealth.
In Western Europe, personal wealth rose 15% to $45.2 trillion in 2017, with half of assets being the investable variety. Distribution of wealth was more balanced than in other regions, with the $100,000-$250,000 segment holding almost half (23%) of investable assets 2017.
In contrast, in Eastern Europe and Central Asia – which have notably high levels of wealth inequality – billionaires alone held 23% of investable assets. The region’s personal wealth saw 18% growth in 2017, reaching $3.3 billion.
Meanwhile, Asia saw personal wealth grow at the highest rate – 19% - reaching $36.5 trillion. China held about 57% of the growing pool of wealth. BCG expects a five-year CAGR of 12% in the region if no large economic shocks occur.
