Paul Thomen

Wednesday, 13 March 2013

Canada 2013 Wealth Book: Land of the Tar Sands

In 2012 there were just over 422,000 HNWIs in Canada in 2012. These HNWIs hold US$1,529 billion in wealth which equates to 26% of the total individual wealth held in the country. Canadian HNWIs outperformed the worldwide HNWI average during the review period − worldwide HNWI volumes decreased by 0.3% whilst Canadian HNWI numbers rose by 1.8%. Following a decline of 3.6% in 2011, the volume of Canadian HNWIs rose by 7.7% in 2012. Growth in HNWI wealth and volumes are expected to improve over the forecast period. The total number of Canadian HNWIs is forecast to grow by 29%, to reach over 544,000 in 2017. HNWI wealth will post a smaller percentage increase, growing by 28% to reach US$1,949 billion by 2017.

Asset allocation of HNWI investments

In 2012, equities were the largest asset class for HNWIs in Canada (29% of total HNWI assets), followed by business interests (25%), real estate (21%), fixed income (11.7%), alternatives (7.4%) and cash (6.4%). Fixed income products recorded the strongest growth over the review period, driven by a movement into safer assets during the financial crisis. The value of business interests increased substantially over the review period, from 21.3% of Canadian HNWI assets in 2007 to 24.7% in 2012. This was aided by solid GDP growth towards the end of the review period and the emergence of a number of new HNWIs mainly from the basic materials, oil and gas and retail and fashion industries. These new HNWIs tended to have most of their funds tied up in business interests rather than investable assets. Over the forecast period, equities are expected to be the top-performing asset class for HNWIs, followed by alternatives. As a result, there will be a movement away from cash and towards alternatives and equities. As of 2012, HNWI liquid assets amounted to US$263 billion, representing 17.2% of the wealth holdings of Canadian HNWIs. WealthInsight’s research showed that in 2012, 23% of Canadian HNWIs had second homes abroad.

The geographic distribution of HNWI investments

At the end of 2012, Canadian HNWIs held 26% (US$372 billion) of their wealth outside of their home country, which is in line with the worldwide norm of between 20−30%. WealthInsight expects foreign asset holdings to reach US$527 billion by 2017, when they will account for 27% of total HNWI assets. In 2012, the rest of North America made up 55% of the foreign assets of Canadian HNWIs. This was followed by Europe with 24%, Asia Pacific with 12%, Latin America with 6.7%, Africa with 1.6% and the Middle East with 0.8%. The share allocated to Europe (including the UK) decreased from 29% in 2007 to 24% in 2012. In 2012, the UK on its own accounted for half of this with 12% of foreign HNWI assets. Other notables included Ireland (3% of foreign HNWI assets) and Luxemburg (2% of foreign HNWI assets).

HNWIs – Regional and city trends

Ontario is the largest state for Canadian HNWIs, accounting for 47% of total HNWIs with just over 198,000 individuals. There are also sizable HNWI populations in Quebec (81,800 HNWIs), Alberta (58,700 HNWIs), British Columbia (49,700 HNWIs) and Manitoba (10,500 HNWIs).Toronto is the largest city for Canadian HNWIs, accounting for 28% of total HNWIs with just over 116,000 individuals. There are also sizable HNWI populations in Montreal (52,700 HNWIs), Calgary (32,100 HNWIs), Vancouver (25,600 HNWIs) and Edmonton (14,100 HNWIs).Ottawa was the top-performing city for HNWIs, with numbers rising by 11% from approximately 9,000 in 2007 to over 10,000 in 2012. This rise was assisted by strong growth in the hi-tech sector in the city. HNWI volumes in Canada’s largest city, Toronto, rose by 4% over the review period, which was slightly above the country average.

Reasons To Buy

- The WealthInsight Intelligence Center Database is an unparalleled resource and the leading resource of its kind. Compiled and curated by a team of expert research specialists, the database comprises dossiers on over 60,000 HNWIs from around the world.
- The Intelligence Center also includes tracking of wealth and liquidity events as they happen and detailed profiles of major private banks, wealth managers and family offices in each market.
- With the Database as the foundation for our research and analysis, we are able obtain an unsurpassed level of granularity, insight and authority on the HNWI and wealth management universe in each of the countries and regions we cover.
- Report includes comprehensive forecasts to 2017.
- Also provides detailed information on UHNWIs in each major city.

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