HNWIs reinvest excess cash: report


By Krystine Lumanta

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A quarter of Australia’s high net worth individuals (HNWI) are already in the process of reinvesting their cash reserves, according to a new Investment Trends report.

The “2013 High Net Worth Investor Report” revealed that last year, HNWIs allocated a larger proportion of their funds to direct listed shares and less to cash and term deposits compared to 2012.

“We find HNWIs to be leading indicators for what the general investor population will do,” Investment Trends senior analyst Uwe Helmes said yesterday.

“While the general population continued to accumulate cash reserves in 2013, according to Reserve Bank of Australia figures, HNWIs were ahead of the curve.”

Collectively, Australia’s HNWIs hold $1.39 trillion in investible assets, with 31 per cent of this currently invested via their self-managed superannuation fund (SMSF).

The proportion of HNWI assets invested in cash and term deposits declined in 2013 for the first time since 2009, dropping from 20 per cent to 16 per cent, while HNWIs allocated a larger portion of assets to direct shares in 2013, increasing from 26 per cent to 32 per cent.

This was driven by more HNWIs investing in direct shares and also a rise in the average amount invested.

The report found 74 per cent of HNWIs had used a financial adviser in the previous 12 months, which included accountants for tax advice.

In addition, 49 per cent of HNWIs had used an investment adviser, that is, an RG 146-compliant adviser such as a financial planner and/or full service stockbroker.

As of November 2013, there were about 400,000 investors in Australia with more than $1 million in investible assets, an increase of 8 per cent from 370,000 in November 2012, the report said.

The report focused on investors with $1 million to $70 million in gross investible assets, excluding their superannuation, primary residence and own business, but including their SMSF investments.

It was based on a survey of 2459 Australian HNWIs, including 100 ultra-HNWIs, and was conducted between September and November 2013.

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