Many investors follow and track inflows and outflows of investor funds. After all, following the trends where the money is headed is nothing new. But what about not worrying about all of the money and just focusing on the smart money? Spectrem Group has released a new series of reports showing the investment trends it has collected about ultra-high net worth individuals. Spectrem showed that over 70% of Ultra High Net Worth (UHNW) investors plan to invest in equities this year and it also showed that the makeup of "BRIC" investing is changing.
Spectrem showed that over 42% of UHNW investors indicated interest in international products at the end of 2012, up 9% from a year earlier. Apparently emerging markets are not dead, but these UHNW investors are now chosing Brazil over China in 2013. Spectrem's insight into the shifting preferences of affluent investors shows the following on UHNW investors: 25% in the fourth quarter of 2012 indicated they were likely to invest in Brazil over the next 12 months while only 23% plan to invest in China.
We would note that Spectrem pointed out that this is a key shift of investor behavior among the UHNW investors. At the start of 2012, those UHNW investors favored investing in China at 27% over the 25% who wanted to invest in Brazil. If you look at the report in just straight percentages, the real outcome is that the interest in Brazil is steady while interest in China is on the decline.
This matters. The wealthy have now backed away from China. Is it a surprise that the wealthy would not invest in a nation where it is widely discussed that even the broadest economic numbers are fudged and where the greatest form of "free speech" only pertains to CFOs of companies based in China that are only listed on a U.S. exchange? Not really.
These UHNW investors are also looking to other markets that are wealthy in resources rather than wealthy in the hope of the future. The report said, "Interest in investing in Canada and Australia is also up over last year, while interest in India is down slightly." UHNW investors rank risk and diversification as their top two investment criteria.
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