World Wealth Report 2009

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Investments of Passion and Philanthropy

Thought Leadership
Investments of Passion

Excerpt from the World Wealth Report 2009.

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The financial crisis and economic uncertainty clearly had an impact on High Net Worth Individuals’ (HNWI) investments of passion and lifestyle spending, with luxury goods makers, auction houses, and high-end service providers reporting significantly reduced demand worldwide. Outright global demand was weaker for passion investments, such as luxury collectibles (e.g., automobiles, yachts, and jets), art and jewelry, and lifestyle spending (e.g., health/wellness, luxury travel, and luxury consumables, such as designer handbags, shoes, and clothes.

However, HNWIs did gravitate to art and jewelry as investments of passion, increasing pre-crises levels to these categories, as an additional means of “flight to safety” – with the idea that these passion investment categories may hold their value better in the long-term.

  • Luxury collectibles remained the primary HNWI passion investment, accounting for 27% of the total among HNWIs globally.
  • Fine art remained the primary passion investment for ultra-HNWIs in 2008 (27% of their total passion investments), and was the second-largest (25%) for HNWIs.
  • HNWIs significantly increased their allocations in jewelry, gems, and watches, becoming the third largest share of passion investment category overall.
  • Lifestyle spending rose on Health/Wellness, where 54% of HNWIs globally said they increased spending, but dropped on luxury travel and luxury consumables.
  • Recession took a toll on Charitable Giving as the year progressed, with little change in the first half the year but severely impacted in Q4 as HNWIs gave less and focused on fewer causes.
  • The outlook for Philanthropy in 2009 is poor with 60% of North American HNWIs saying they would be giving less due to the economic downturn. Japan was the only country that forecasted a growth in charitable donations.