Strong economy helps boost the number of high net worth Canadians: survey
Breakneck economic growth in Canada last year caused the number of high net worth individuals to jump 5.5 per cent over 2016, part of a broader trend that has substantially boosted investor returns as global markets improve.
According to a survey by Capgemini SE, a Paris-based consultancy, the number of very wealthy Canadians grew to 376,000 in 2017 from 356,000 in 2016. Their total value of assets under management in Canada also grew, to US$1.198 trillion last year from from US$1.117 trillion.
The survey defines high net worth people as those with more than US$1 million in investable assets, excluding primary residence, collectibles, consumables and consumer durables.
CanadaвЂ™s economy grew at a blistering pace in the first half of the year, easily the fastest growing in the G7 at three per cent. The U.S. economy expanded 2.3 per cent in 2017 while GermanyвЂ™s GDP grew 2.2 per cent.
Rapid economic growth in Canada was underscored by a 7.1 per cent increase in real estate prices over the year, as well as a 16 per cent rise in market overall capitalization.
Canada has the eighth-highest number of high-wealth individuals among the countries surveyed; the U.S. has the most (5.2 million individuals), followed by Japan (3.2 million) and Germany (1.4 million).
The growth in the number of high-wealth investors in Canada mirrors a broader international trend, in which the richest investors have begun to reap better returns as the global economy improves.
Globally, high net worth individuals enjoyed investment returns of more than 27 per cent in 2017, the second year in a row above 20 per cent. Overall, the wealth of those individuals surpassed the US$70 trillion threshold for the first time in 2017, growing 10 per cent compared to the year prior.
Equities remained the largest asset class among high net worth individuals at 30.9 per cent, followed by cash and cash equivalents at 27.2 per cent and real estate at 16.8 per cent.
Despite raking in substantial gains over the year, few high net worth investors felt they had a sufficiently close relationship with their asset managers.
вЂњIn 2018, only 55.5 per cent of HNWIs said they connected very well at a personal level with their wealth managers, despite substantial investment returns delivered over the past two years,вЂќ Capgemini said in a release.
The firm also found high net worth investors were вЂњcautiously interestedвЂќ in crypto currency investments after the value of some digital currencies popped last year. Twenty-nine per cent of respondents said they had a вЂњhigh degreeвЂќ of interest, while 26.9 percent said they were вЂњsomewhat interested.вЂќ
Even with strong growth over the year, the survey found that inflationary pressures, and the threat of rising interest rates, still weighed somewhat on investor returns over the year.
Capgemini surveyed 2,600 HNWIs across 19 major markets, including Latin America, Europe, Asia-Pacific and North America.