40pc millionaires in India prefer social impact investment

A year after the APAC region recorded the highest population of high net worth individuals (HNWI), the region now leads the world with the largest amount of HNWI wealth, according to the Asia-Pacific Wealth Report 2016 by Capgemini.

APAC HNWI wealth grew 9.9 percent in 2015 to USD 17.4 trillion, growing 5.8 times the 1.7 percent ‘Rest of the World (RoW)’ growth rate.

The HNWI population grew by 9.4 percent to pass 5 million, growing 3.5 times the RoW growth rate of 2.7 percent.

Japan has the maximum number of HNWI population in APAC at over 27 lakh followed by China at more than 10 lakh in 2015 and Australia 2.3 lakh.

Notably, India is home to the fourth largest population of HNWI in the APAC region, with total wealth of USD 797 billion. The number of HNWIs in India jumped to 2 lakh last year from 1.8 lakh in 2014, while their overall wealth rose by 1.6 per cent during the same period.

However, despite the upswing in trust in every aspect of wealth management, APAC (excluding Japan) HNWIs are more likely to keep their wealth in cash or a retail bank account (32.6 percent) than hold it with a wealth manager (30.6 percent).

“Traditional investing behavior in Asia-Pacific is to hold a significant portion of their assets in cash but there is now an opportunity for goal-based financial planning with a focus on growth to attract more investment,” said Anirban Bose, Head of Banking and Capital Markets, Capgemini.

The report also highlights the growing trend of social impact investment in the region, as over a third (37.3 percent) of the portfolios of APAC (excluding Japan) HNWIs are geared toward social improvement, compared to only 31.6 percent for those globally.

In terms of social impact investments, Indonesia is a global leader in social impact investing at 45.8 percent of portfolio allocations toward social impact, followed closely by Malaysia (43.6 percent), China (40.8 percent), and India (40.4 percent).

Demographically, up to 40 percent of younger Asia-Pacific (excl. Japan) HNWIs (under-40) are interested in social impact investing, compared to only one-fourth of those over-60.