The extremely rich don’t always get extremely richer. According to a new report from the Boston Consulting Group, global assets under management (AuM) are estimated to shrink 8% from 2007 to 2008. Victor Aerni, a partner in BCG’s Zurich office and co-author of the 2008 Global Wealth report said that “in 2006-07, there was approximately $109.5 trillion AuM. Our estimates for 2008 is that the market has shrunk and valuations have come down to around $100 trillion. We don’t see it growing again this year.”
Put another way that means the world lost approximately three times the 2007 U.S. federal budget.
In fact, the revision is even more dramatic given that the report had originally projected that global AuM would reach a record $113.2 trillion.
Aerni, however, emphasized that BCG is bullish in the long term and is “confident that the global economy will come back as it did after the financial crisis of 2001.” BCG predicts that global AuM in 2012 will reach an astonishing $138.3 trillion.
One of the more interesting facts presented by BCG is that while the U.S. has far and away the most millionaire households, in 2007 Europe had the strongest growth in millionaire households. From 2002 to 2007, the number of millionaire households in Europe grew 19.1%, whereas in the U.S. it grew 10.2%. For the purpose of the report BCG included the fast-growing regions of Russia and Eastern Europe within Europe.
The region with the second-greatest growth was Latin America, which posted a 15.8% jump in household with more than $1 million in investable assets.
Moreover, there are many markets that are seeing a surge in investable assets. Brazil grew 45.2% between 2006 and 2007, followed by Poland, China, Slovakia and Chile.
The takeaway is that despite the global credit crunch and economic spanking nearly everyone seems to be taking there is still enormous amounts of wealth out there. Let’s just hope we don’t see too many more years when global AuM sheds more than $10 trillion.