Many people might imagine the rich and wealthy as Scrooge-like figures, counting gold in their counting houses and lording it over the rest of us mere mortals.
But these days, the richest Australians tend to derive their wealth from a variety of asset classes, including property and ASX shares, and not from gold coins (although I'm sure there are more than a few floating around the wealthier suburbs of Australia).
But how popular exactly are ASX shares right now amongst the rich and wealthy? Are they setting an example the rest of us should be following?
A recent article from wealth manager LGT Crestone discusses this very question.
Top of the asset-rich list?
Interestingly, LGT Crestone found that the top asset class held by the 'ultra-rich' (those with $10 million or more in assets outside the family home) across the first half of 2023 wasn't property or shares but cash and term deposits. This cohort reportedly has an average allocation to cash assets of 50% over this period.
For 'high-net-worth individuals' (those with $1 million-plus outside the family home), the average was 30%.
However, it is worth noting that this survey of ultra and high-net-worth individuals was conducted over April 2023, around the same time as the collapse of Silicon Valley Bank was unfolding. The report notes that this could have spooked many rich investors.
LGT Crestone chief executive Michael Chisholm stated the following on these findings:
Since this survey, we are seeing our clients move money out of equities and cash and into bonds, due to fixed income opportunities providing comparable yields to equities at a much lower risk.
However, Chisholm went on to say that his firm had noticed a long-term trend of high-wealth individuals moving away from real estate and shares and towards private markets and alternative assets:
The number of companies listed in the US has steadily fallen in recent years and this is the first year in 20 years that the ASX has shrunk…
More and more big companies are staying private and therefore, if you want to participate in that growth, you want to be invested through private markets.
How much do the rich invest in ASX shares?
Here's a more comprehensive breakdown of how both ultra-high-net-wealth and high-net-wealth investors tend to structure their investment portfolios:
| Asset class | High-net-wealth investors (% of portfolio) | Ultra-high-net-wealth investors (% of portfolio) |
| Real estate | 48% | 42% |
| Australian shares | 40% | 43% |
| Real estate investment trusts (REITs) | 32% | 25% |
| Cash, term deposits | 30% | 50% |
| Mutual (managed) funds | 30% | 28% |
| International shares | 22% | 22% |
| Bonds | 18% | 15% |
| Cryptocurrencies | 17% | 18% |
| Exchange-traded funds (ETFs) | 16% | 21% |
| Art, antiques and collectibles | 16% | 18% |
| International ETFs | 16% | 21% |
| Clean energy | 13% | 13% |
| Artificial intelligence (AI) | 10% | 9% |
So it's interesting to note that the ultra-rich seem to be more conservative with their investing than their high-wealth counterparts, exemplified by the increased preference to cash assets, amongst others.
This does make sense, when you have that much money at your disposal, you're probably more concerned with maintaining your wealth than building it rapidly.
Even so, ASX shares are clearly a favourite investment of both high-wealth and ultra-high-wealth investors, with an average portfolio allocation of 40% and 43%, respectively. That's enough to give me confidence in continuing to build wealth on the share market.
