June 24 (Bloomberg) -- The ranks of the world’s millionaires shrank at the fastest rate in 2008, with North America suffering the biggest wealth loss worldwide, according to a survey by Capgemini SA and Merrill Lynch & Co.

The global slump in property and equity markets last year cut the number of millionaires by 15 percent to 8.6 million, wiping out two years of increases, the firms said in their 13th annual World Wealth Report published today. The value of the world’s millionaires’ assets slid 20 percent to $32.8 trillion, after a 9.4 percent increase the previous year, the survey said.

The credit crisis sent stock indexes to their worst annual losses since the Great Depression and slashed the value of real- estate holdings, hedge-fund and private-equity investments in 2008. The benchmark Standard & Poor’s 500 Index dropped 38 percent, its steepest annual decline since 1937.

“No country was left untouched by the financial crisis and there was nowhere to hide as an investor,” Daniel Sontag, president of Merrill Lynch’s global wealth management unit, said in New York today.

The financial wealth of Asia-Pacific millionaires will surpass those of North Americans by 2013, driven by economic growth in China and U.S. consumer spending, Merrill and Capgemini said. The value of millionaires’ assets globally will resume rising by 2013 and climb to $48.5 trillion, the report said.

“Signs of stabilization are emerging, resulting in a shift in high net-worth activity as well as priorities,” Sontag said. Millionaire investors will move away from capital preservation and increase equity allocation in 2010, according to Sontag.

Fixed-Income, Cash Holdings

The world’s wealthy shifted their money out of riskier investments last year into bonds and cash. Fixed-income and cash holdings rose 6 percent in 2008 to make up half of their investments, Merrill and Capgemini said. Millionaires around the world also increased investments in their home countries, continuing a trend that began in 2006.

The number of people in the ultra-high net worth category, those with more than $30 million to invest, not including the value of their homes or consumable goods, fell 25 percent. This was because they had a greater proportion of their assets tied up in equities, hedge funds and private equity, Sontag said.

The U.S. is home to the most millionaires with more than 2.5 million, the report said. China overtook the U.K. with the fourth most millionaires after the U.S., Japan and Germany. The number of millionaires in North America fell by 19 percent last year, outpacing a 14 percent decline in Europe and the Asia- Pacific region.

Lost Confidence

Almost 30 percent of wealthy clients surveyed withdrew assets or left their wealth management firms in 2008 and 46 percent lost confidence in their advisers, the report said.

“Wealth management firms should reevaluate current capabilities to ensure simplicity and transparency,” said Bertrand Lavayssiere, managing director of global financial services at Paris-based Capgemini.

The World Wealth Report is compiled by surveying 1,350 financial advisers, 200 high net-worth clients and more than 60 executives at wealth management firms worldwide, Merrill said. Bank of America Corp., based in Charlotte, North Carolina, completed its acquisition of Merrill on Jan. 1.

Outliving Nest Eggs

Another survey by Hartford, Connecticut-based insurer Phoenix Cos., released in April, said 51 percent of U.S. investors who have a net worth of $1 million, excluding primary residences, are worried about outliving their nest eggs because of poor investment performance and inflation.

“High net-worth investors aren’t weathering this economic downturn as well as they have in the past,” said Walter Zultowski, senior vice president of research and concept development at Phoenix. More investors are concerned about running out of money and fewer investors are focused on preserving a comfortable lifestyle, Zultowski said.

To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net

Last Updated: June 24, 2009 13:47 EDT