Growth in HNWI Wealth & Volumes in Russia to Improve by 2016, Says WealthInsight

27 Aug 2012 • by Natalie Aster

As of 2011, there were just over 159,500 HNWIs in Russia, with a combined wealth of US$941 billion. The total number of HNWIs in Russia decreased by 18.1% during the review period (2007–2011), while HNWI wealth declined by 25%. The wealth of HNWIs in Russia was negatively influenced by a significant depreciation of the local currency against the US dollar and a weak local equity market. Volumes were also impacted by the emigration of over 20,000 Russian HNWIs. Growth in HNWI wealth and volumes will improve over the forecast period as businesses are developed within the country and overseas investors begin to move in as Russia joins the WTO. HNWI volumes will record a smaller percentage increase, growing by 36% to reach just over 216,000 individuals in 2016.

In 2011, equities were the largest asset class for HNWIs in Russia (30.7% of total HNWI assets), followed by real estate (21.8%), fixed income (17.5%), alternatives (7.4%) and cash (5.8%). Fixed income products recorded the strongest growth over the review period, driven by high money market rates on local bonds and a movement into safer asset classes. Over the forecast period, there will be a movement away from equities and fixed income products towards alternatives and real estate.

According to the report “Russia – The Future of HNWIs to 2016: The Land of Oil and Gas” by WealthInsight, in 2011, HNWIs in Russia held 31% (US$288 billion) of their wealth outside of Russia, which is in line with the global average. Equities and alternative products had the highest foreign allocations, of 63% and 33% respectively, in 2011. In 2011, Europe made up the largest share of the foreign assets of Russian HNWIs at 66.8%. This was followed by North America (13.2%), Asia Pacific (12.7%), the Middle East (4.6%), Latin America (2.2%) and Africa (0.5%). The bulk of European investment is focused in the UK and Switzerland. Second homes in London in particular, are a major asset for many Russian HNWIs.

Report Details:

Russia – The Future of HNWIs to 2016: The Land of Oil and Gas
Published: August, 2012
Pages: 117
Price: US$ 4.995,00

The global private banking industry was estimated to have AuM of just over US$16.5 trillion in 2011. The Russian wealth management sector accounts for approximately US$65 billion of this, which equates to 7% of Russian HNWI wealth (US$941 billion). The Russian wealth management industry is likely to expand over the forecast period as more HNWIs are created. Furthermore, the ongoing crackdown on offshore centers is likely to result in a large inflow of private banking funds back into the country. Other prominent foreign competitors include Pictet and Goldman Sachs. The leading locally based private banks are UFG Invest, Troika Dialog and Third Rome.

More information can be found in the report “Russia – The Future of HNWIs to 2016: The Land of Oil and Gas” by WealthInsight.

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