Asian household wealth rises an average 7.6% in 3 years

Asian household wealth has grown at an average 7.6 per cent in the last three years despite the economic downturn during 2001-03.

US households' wealth on the other hand, has been eroded by two per cent during the same period.

The strong point favouring Asian households' investment portfolio was the fact that a large portion was invested in the form of cash like fixed deposits and in short term savings.

In vast contrast, US households' investments are professionally managed and invested in insurance, mutual funds and pension plans.

"While the US market nosedived and is now in a recovery mode, the Asian market has not fared as bad during the same period of economic downturn. Obviously it has been doing something different," said Vineet K Vohra, vice president (regional director) invesment business (Asia Pacific) Citibank NA.

With a resilience to crises post the Asian Flu the accumulation of wealth of Asian households has remained uninterrupted.

Over the last decade from 1993-2003, household financial assets in Asia have grown by $ 1.3 trillion, while that for US households increased by $ 10.8 trillion during the same period.

This is based on Citigroup's Asia Pacific Wealth Evolution Study undertaken by Citigroup, undertaken by the US-based research group, CBM Market Research.

There is a marked shift today among Asian households to move towards holding less cash. The growth rate of investment in mutual funds is at 17 per cent in Asia as opposed to one per cent in the US over the last three years.

There has been a fall in the growth rate of keeping wealth in the form of cash from eight per cent over the last 10 years to 6 per cent in the last three years (2000-03).

"On an average 52 per cent of the wealth is self managed in the form of cash and deposits, another 17 per cent is invested in equity by individuals and four per cent in bonds. The balance 28 per cent is now moving towards professionally managed services including mutual funds (7 per cent), life insurance (14 per cent), pension (five per cent)," said Vohra.

In India about 80 per cent of wealth remains in the form of cash and deposits and 20 per cent is moving towards professionally managed products, said Amit Sah, marketing director, retail bank, global consumer group, Citibank.

The composition of assets in Asia is changing in keeping with the US market, with a greater shift to bonds and equity funds as well as long term investments like pension and insurance.

"This proves to be more beneficial for the economy as these are longer-term funds which can be utilised for investment in infrastructure projects," said Vohra.