Online version: http://www.lowtax.net/newsletter/ltx_focus_august08.asp

Dear Colleague,

In this month's LTX focus we take a fresh look at Private Wealth Management.

There is such a lot of money!

Despite a presumably temporary dip in asset values as a result of shell-shocked markets post sub-prime, HedgeFund.net said recently that total hedge fund assets stood at USD2.848tn at the end of March 2008.

New allocations of USD53.02bn during Q1 couldn't overcome performance losses of USD93.18bn, resulting in total hedge fund assets experiencing a quarterly decrease for the first time on record. The 1.4% decrease in Q1 2008 compares to an increase of 11.5% in the first quarter of 2007.

According to the 12th annual World Wealth Report, released in June 2008 by Merrill Lynch and Capgemini, the wealth of the world's high-net-worth individuals (HNWIs1) increased 9.4 percent to US $40.7 trillion in 2007. The number of HNWIs in the world increased 6 percent in 2007 to 10.1 million, the number of ultra-high-net-worth individuals (Ultra-HNWIs2) increased by 8.8 percent, and for the first time in the history of the Report, the average assets held by HNWIs exceeded US $4 million.

A study by consulting firm McKinsey and Company published in January, 2007, estimated that the value of total global financial assets, including equities, government and corporate debt securities, and bank deposits, expanded to $140 trillion in the 12 months to the end of 2005, an increase of $7 trillion from a year earlier. That is a growth rate of 5.3%.

There are no consolidated figures for the growth in offshore assets - many jurisdictions simply don't release figures. But for those that do, it is clear that the rate of increase in banking, trust and fund assets dramatically outpaces McKinsey's global figure.

In Jersey, for instance, banking and investment fund assets were approaching GBP500 billion at mid-year, up 40% in the last two years. In Guernsey, bank deposits rose 14% last year to GBP92 billion, and fund assets rose 45% to GBP210 billion in the year to June, 2008.

In the Isle of Man, fund assets surpassed the $50 billion mark as at June 30, 2007, bringing the total of assets just in the UK's near-shore islands to more than US$2 trillion, up 30% in total over the previous two years.

So where does it all come from?

From rich people, stupid!

They are the new kids on the block, the new rulers of our world. They are going to get richer, and there are going to be more of them. There are already more than 10 million dollar millionaires in the world, and that number has seen more than 10% annual growth in the last few years.

It is estimated that the assets of these 10 million rich people top US$50 trillion. And beneath them are tens of millions of 'mass affluent' people with free, investible assets in excess of US$100,000. And beneath them . . .

You can read the rest of the feature here:
http://www.investorsoffshore.com/html/specials/hinwi_august08.html.

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Kind regards,

Kate James