The performance of the Russian liquid wealth market is driven by strong growth in the retail savings and investments market. Given the predominant allocation in deposits, year-on-year growth has depended primarily on GDP and wage growth, which in turn have been influenced by commodity prices. While HNW wealth is forecast to record a compound annual growth rate (CAGR) of 12.3% between 2016 and 2020, the rest of the country’s affluent population is expected to develop at a slower pace.
- At the end of 2015, 1.79 million Russian adults could be considered affluent, representing just 1.6% of the adult population but accounting for 97% of total retail liquid assets. The total liquid wealth of affluent individuals amounted to $428bn, with HNW individuals holding $163bn (37.9%).
- The retail savings and investment market is forecast to grow by 9% in 2016 and 15% in 2017. From 2016 onward the macroeconomic environment is forecast to improve, and there should be a noticeable pickup in the retail savings and investment market.
- Russian investors allocate the largest proportion of wealth to deposits, constituting 93% of the average portfolio, while the country’s securities market remains underdeveloped.
- Russian HNW individuals allocate the majority of their wealth to traditional asset classes. Non-traditional investments account for only 14.5% of HNW portfolios.
- The main reasons Russian HNW individuals invest offshore are for a better range of investments and geographic diversification. The developed markets of Switzerland, the UK, and Singapore are preferred booking centers.
“Wealth in Russia: Sizing the Market Opportunity 2016” analyzes the Russian wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.
Specifically the report:
- Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.
- Analyzes which asset classes are favored by Russian investors and how their preferences impact the growth of the total savings and investments market.
- Examines HNW clients’ attitudes towards non-liquid investments such as property and commodities.
- Identifies key drivers and booking centers for offshore investments.
- Examines the tax landscape in Russia and future implications for investors.
Reasons to Buy
- Benchmark your share of the Russian wealth market against the current market size.
- Forecast your future growth prospects using our projections for the market to 2020.
- Identify your most promising client segment by analyzing penetration of affluent individuals in Russia.
- Evaluate your HNW proposition by understanding how the Russian tax system impacts HNW clients.
- Review your offshore strategy by identifying HNW motivations for offshore investments and their preferred booking centers.
- The Russian wealth market is set to record a CAGR of 12.3% to 2020
- Key findings
- Critical success factors
2. SIZING AND FORECASTING THE RUSSIAN WEALTH MARKET
- Affluent individuals will represent 3% of the adult population by 2020
- 97% of total liquid assets are held by affluent individuals
3. DRIVERS FOR GROWTH IN THE RUSSIAN WEALTH MARKET
- Russia's retail savings and investments market is forecast to grow
- Russia is dominated by deposits, reflecting an underdeveloped securities market
- Deposits will continue to drive the Russian retail savings and investments market
- Deposits growth will continue to outperform GDP
- Interest rates have limited impact on demand for deposits
- Oil producers and Western sanctions impact the Russian bond market
- Steady growth is forecast for Russia's bonds
- Equities and mutual funds are driven by the performance of the stock market
- The Russian market has displayed favorable growth in 2016
- Equity and mutual fund holdings have broadly followed the MICEX
4. HNW INVESTMENT PREFERENCES
- HNW individuals allocate 14.5% of their investible assets outside of traditional investments
- HNW investors allocate almost half of their non-traditional investments into property
- Russian millionaires prefer alternatives to commodities
- Russian HNW individuals have a significant propensity to invest offshore
- The majority of offshore wealth is kept in bond investments
- Access to a better range of investments is the major driver of investing offshore
- Singapore, Switzerland, and the UK account for 71.5% of offshore bookings from Russia
- Taxation in Russia
- Abbreviations and acronyms
- Supplementary data
- Liquid assets
- Mass affluent
- Mass market
- Exchange of information
- 2016 Global Wealth Managers Survey
- Global Wealth Model methodology
- Global Retail Investments Analytics methodology
- Exchange rates
- Further reading
- About the Author
List of Tables
Table 1: Total Russian adult population by asset band (000s), 2011-15
Table 2: Total Russian adult population by asset band (000s), 2016f-20f
Table 3: Total Russian onshore liquid wealth segmented by asset band ($bn), 2011-15
Table 4: Total Russian onshore liquid wealth segmented by asset band ($bn), 2016f-20f
Table 5: Russian ruble-US dollar exchange rates, December 31, 2014 and December 31, 2015
List of Figures
Figure 1: Affluent individuals account for 1.6% of the Russian population
Figure 2: HNW individuals account for 36.7% of Russia's total liquid assets
Figure 3: Moderate growth is forecast for Russia's retail savings and investments market
Figure 4: Russian HNW individuals will increase deposit and decrease mutual fund allocations
Figure 5: Future growth will be driven by bonds and deposits
Figure 6: Steady GDP growth will contribute to more stable deposit holdings
Figure 7: Moderate growth is expected for Russia's bond market
Figure 8: MICEX index weightings are strongly concentrated around the energy sector
Figure 9: Stock market performance highly impacts the growth of equities and mutual funds
Figure 10: 85.5% of Russian HNW wealth is held in traditional liquid allocations
Figure 11: Russian HNW individuals hold nearly half of their liquid wealth offshore
Figure 12: Access to a better range of investments and geographic diversification are the leading motivations for offshore investments
Figure 13: Europe accounts for over three quarters of Russian HNW offshore bookings
Figure 14: Russia has DTCs with a vast number of countries around the world