Number of people in Ireland with assets of $1m falling, study finds

THE NUMBER of people in Ireland with more than $1 million (€640,000) in "investible assets" fell by 1,000 last year, amid a slowing economy and falling equity markets.

A new Merrill Lynch report shows that the number of high net worth individuals in the Republic fell by 4 per cent in to 20,000 in 2007. The Global Wealth Reportalso shows that the value of this group's wealth also dropped, declining from about $84 million to $80 million, as 1,000 people dropped from this grouping.

And, as the economy moves into recession, Richard Dunne, director of portfolio management with Merrill Lynch in Dublin, said that he expects the number in this group to fall again this year.

Mr Dunne predicts that in 2008 the fall-off in the number of Irish high net worth individuals will be more significant than the 4 per cent drop recorded in 2007, as the outlook for the two main drivers of wealth creation - GDP growth and market capitalisation - remains poor.

However, Mr Dunne expects the Irish high net worth market to be "back on track" by 2012, and is predicting asset growth of about 5 per cent each year between now and then. He added that in future, investments by such individuals would be more mobile, as they look to invest more of their wealth outside of Ireland.

During 2007, Irish investors, in line with their global counterparts, shifted their assets from equities to safer, more traditional investments such as cash and deposits.

Globally, cash/deposits and fixed-income securities accounted for 44 per cent of total assets in 2007, up from 35 per cent in 2006.

Investors also trimmed their allocations to alternative investments and property, with many selling property and moving the money into other asset classes. Overall, investment in real estate as a proportion of a total portfolio declined from 24 per cent in 2006 to 14 per cent in 2007.

According to Mr Dunne, the high net worth group's concerns include the safety of their assets, their ability to sell property at prices they want and maintaining their standard of living.

Globally, the survey revealed that the number of high net worth individuals increased by 6 per cent in 2007 to 10.1 million people worldwide and their total wealth grew by 9.4 per cent to $40.7 trillion. Emerging markets registered strong advances, with India, China and Brazil experiencing the highest growth levels globally.

Merrill Lynch predicts that this group's total financial wealth around the world will reach $59.1 trillion by 2012, growing at an annual rate of 7.7 per cent.