UK Millionaires 'Spreading Their Bets'

The UK's millionaires are showing little faith that the economy here is likely to improve any time soon, according to a research published on Wednesday.

Government policies, the threat of a share market crash and Britain's economic uncertainty are the three primary risks that is making the UK's Millionaires jittery and leading them to spread their bets.

According to the research commissioned by investment firm Skandia for its Millionaire Monitor report, almost 78% of UK millionaires felt the economic crisis had changed the investment landscape and around two thirds said it had changed their expectations for future investment returns.

To combat the economy's uncertainty, UK millionaires are spreading their money across a mix of investments to diversify their risk, with the usually safe investment of property now accounting for the largest chunk of their wealth.

Only a fifth of the wealth of millionaires is being held as cash, while shares and managed investment funds make up most of the rest.

Graham Bentley, Skandia's investment expert, comments:

"People might assume that a lot of millionaire wealth is 'old money' and hence it would be natural for a lot of it to be tied up in property. However, that is not the case. Nearly half of millionaires say their wealth has been earned from employment income with only 14% having inherited it.

"This shows that property is genuinely an investment that millionaires feel comfortable with and this looks set to continue. However, it looks like millionaires will also be looking to benefit from depressed stock market valuations to increase their wealth over the next six months."

According to the research, male millionaires take more risk than female millionaires, with men holding half as much again in shares and managed investment funds than women. The female rich hold more cash than men, and are also twice as likely to invest in art, antiques, collectibles and precious metals like gold and silver.

More than a quarter of both sexes will be increasing their holdings in cash with 15% turning to fixed interest and 11% focusing on commodities such as gold and silver. However, female millionaires are more positive about property as an investment with four out of 10 saying they are likely to increase their exposure to property investments over the next six months.

Conversely, men strongly favour shares with two out of five looking to increase their exposure to the stock market compared to just one out of five women.

Given the current economic uncertainty around the world, more millionaires have a negative outlook for the next 12 months than a positive outlook. Almost half believe the general economic situation in the UK will get worse over the next year compared to just over a third who believe it will get better.

However, millionaires are almost equally divided in their opinion of how the economic slump will impact their household.

(DW/BMcC)