The global population of high net worth individuals grew by 17.1 per cent last year to 10 million, returning to its 2007 level, while HNW individuals' wealth rose by 18.9 per cent to $39 trillion, with HNWI wealth in Asia Pacific and Latin America surpassing its 2007 level, according to the Merrill Lynch/Capgemini World Wealth Report 2010.

For the first time, the high net worth individual population in Asia Pacific, at 3 million, is equal to that in Europe, and lags just slightly behind North America’s HNWI population of 3.1 million. Latin America, the Middle East and Africa, meanwhile, have 0.5, 0.4 and 0.1 million HNW individuals respectively.

The rise in the wealth of HNW individuals in the Asia Pacific region underscores why Western wealth management firms are expanding into the region. Dozens of Western banks, for example, are looking to tap in to the expanding ranks of an affluent middle class.

However, in terms of the total wealth these individuals hold, Latin America fares much better than would be expected from its HNW individual population. This is because it has an unusually high share of ultra-wealthy among its HNW individual population (2.4 per of Latin America’s HNW  individuals are considered ultra high net worth compared to a global average of 0.9 per cent).

Overall, the wealth of the US’s HNW individuals is $10.7 trillion, Europe’s is $9.5 trillion, Asia Pacific’s is $9.7 trillion, Latin America’s is $6.7 trillion, the Middle East’s is $1.5 trillion and Africa’s is $1 trillion, according to the report.

At a country level, the US, Japan and Germany remain the top three countries in terms of HNW  individual population, collectively home to 53.5 per cent of the world’s HNWI population. These are followed by China and the UK.

Another trend noticeable last year was the gains made by the ultra high net worth segment, as this sub-set of HNW  individuals increased its wealth by 21.5 per cent in 2009, compared to the global average for HNW  individuals of 18.9 per cent.

Going forward, the global economy is showing clear signs of recovery, said Nick Tucker, market leader, UK & Ireland, Merrill Lynch Global Wealth Management, and the BRIC nations are expected to be the powerhouses of wealth creation.

The report forecasts world real GDP growth in 2010 of 3.0 per cent, and of 2.6 per cent in 2011.

In terms of what investors are doing with their money in this context, they are “wearily and cautiously” returning to risk assets, said Tucker.

Last year HNW  individuals gradually reduced their holdings of cash deposits, while their fixed income allocation rose to 31 per cent from 29 per cent in 2008, and their equities allocation rose to 29 per cent up from 25 per cent a year earlier.

And while “the love affair with fixed income continues” and there is a clear desire for predictable income, said Tucker, HNW individuals’ equities allocation is expected to increase to 35 per cent in 2011.

In terms of regional allocation, HNWIs started to move assets outside of their home regions in 2009, as they recovered risk appetites and searched for greater returns and diversification. This trend was particularly marked in Europe, where asset allocation to markets outside the home region increased by 6 percentage points, according to the report.

Looking forward, although regional asset allocations are not expected to change dramatically, this trend is expected to continue, with HNW individuals increasing their allocation towards Asia Pacific and decreasing their exposure to Europe.