Last year’s financial turmoil left few places to hide but while investors flocked to the traditional safe havens of cash, gold and government bonds, HNW individuals also significantly increased their allocations to passion investments such as art and jewellery, the latest Merrill Lynch/Capgemini World Wealth Report found.

According to the report, passion investments - which include art, jewellery and luxury collectables such as cars or yachts - were seen by the world’s wealthy as assets which may hold their value better in the long term and were used as an additional means of a flight to safety in 2008.

Foremost among the report’s findings was that art and jewellery took on a renewed significance compared to pre-crisis levels. Within their investments of passion, the report found that HNW individuals increased their allocations to jewellery to 22 per cent in 2008, compared to 18 per cent in 2006, and allocations to art stood at 25 per cent last year, rising from 20 per cent in 2006.

But while art became HNW investors’ second-largest allocation, it remained the primary passion investment for the ultra high net worth, representing 27 per cent of their total passion investments.

While art and jewellery became more popular globally, regional differences in allocations were apparent. Although jewellery, gems and watches rose to have the third largest share of passion investment category globally, these assets were the top choice of HNW individuals in Asia and the Middle East. “Sales and interest in the category have continued to stay strong in this region, despite the crisis,” the report said.

In another example of regional divergence, more European (30 per cent) and Latin American (27 per cent) HNW individuals invested in fine art than did their counterparts in Asia ex-Japan (23 per cent), North America (21 per cent), or the Middle East (17 per cent).

However, despite increased allocations to art and jewellery, the report found that luxury collectables continued to account for the largest portion of passion investments in 2008, representing 27 per cent of the total among HNW individuals globally (26 per cent in 2006).

Additionally, it emerged that in 2008 HNW individuals in Japan and North America allocated more to luxury collectables than those in other regions, with 33 per cent and 29 per cent respectively.

In other findings, allocations to other collectables - such as wine, antiques, coins, memorabilia - and sports investments respectively accounted for 12 and 7 per cent of all passion investments in 2008. Compared to pre-crisis levels of 2006 these proportions held steady, the report said, however outright demand for these items was clearly weaker in 2008.

Unsurprisingly, last year’s economic uncertainty prompted a decrease in HNWI spending on luxury and experiential travel, with HNWIs from North America decreasing the most (55 per cent). Within the lifestyle spending category, purchases of luxury consumables also fell – 43 per cent of all surveyed HNW individuals, and 60 per cent of those in North America, said they spent less on luxury consumables in 2008.

However, although the world’s wealthy were cutting back on luxury goods, the report found that spending on health/wellness – including spa visits, fitness-equipment installations, and preventative medicine procedures – was the only lifestyle spending category to see a significant increase in spending in 2008.

Globally 54 per cent of the HNW individuals surveyed said they increased spending on health/wellness in 2008, but Japan led the way in this type of expenditure, with 67 per cent of the country’s wealthy reporting that they had increased their spend in this area.