The fund manager of a UK equities fund is deeply pessimistic on the outlook for financial companies but is bullish on wealth management firms due to an expected rise in the number of high net worth individuals around the world. Rob Burnett, who manages the UK-registered Neptune European Opportunities Fund, holding £525 million ($1.02 billion) of assets, told a gathering of journalists, that over the medium term, banks, insurers and other major financial firms will shrink in their relative contribution to established economies, having boomed for the past few decades on the back of deregulation and low interest rates. He said that in 1980, financials accounted for about 10 per cent of the weighting of the US S&P Index of equities, a figure that has more than doubled, reaching a peak of 26 per cent in 2006 before declining slightly last year. Mr Burnett expects that decline to continue, as energy, commodity and other sectors rise in relative importance. Mr Burnett, whose fund typically holds no more than 50 stocks, says he is "aggressively" underweight financials. Although he briefly bought exchanged traded funds a few weeks ago to exploit what he saw as a temporary recovery in the financials sector, he has since sold those ETF positions. But while he is gloomy about financials overall, Mr Burnett takes a very different tack on private banks and other institutions catering for high net worth individuals: “Private banking is really interesting because of the massive wealth creation, in emerging markets and elsewhere, which has been going on. These [HNW] people need to be catered for.” His argument echoes recent surveys by Merrill Lynch/CapGemini, and Barclays Wealth, noting that the number of HNW individuals in the UK and the rest of the world has risen substantially in recent years and is set to continue. Barclays Wealth, for example, said earlier this month that the number of individuals with at least $1 million of investable wealth would almost double by 2017, reaching a figure of more than 62 million people. But while he is bullish on wealth management businesses, Mr Burnett says he most favours private banks which are not parts of general banking conglomerates with under-pressure investment banks. “Private banking is still a secular growth story but the problems is that most of them have an investment bank bolted on,” Mr Burnett said. Mr Burnett said he is also bullish on inter-dealer brokerage firms such as UK-based ICAP, as these firms are well placed to exploit volatility in sectors such as commodity derivatives and freight derivatives.