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Published by: Wealth-X
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Total Wealth Research: Billionaire’s Asset Holdings and Wealth Sources

Published by: Wealth-X
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The Wealth-X Billionaire Census 2018 explores the drivers behind the major growth in billionaire performance in 2017, the power of financial markets, and the impact of key, political developments on billionaire net worth.

The Wealth-X Billionaire Census 2018 explores the drivers behind the major growth in billionaire performance in 2017, the power of financial markets, and the impact of key, political developments on billionaire net worth. The report examines regional trends– from the rapid expansion of ultra wealth in Asia-Pacific to the more subdued growth in Europe, highlights the substantial gains in net worth achieved by the world’s billionaires, and analyzes the main asset holdings, industry concentrations, and sources of wealth in the billionaire population.

The key findings on total wealth research include:

Asset Holdings

  • Previous reports have shown a long-standing preference among billionaires to hold the largest portion of their portfolios in one or more privately owned businesses. This share has recently been declining, and in 2017, there was a market shift in favor of public holdings, driven by the robust upturn in world equity markets and the strong growth in Asia’s billionaire class.
  • 5% of total billionaire wealth was in public holdings in 2017, up from 33% in 2016. A third of billionaires’ portfolios was held in private assets, down from 38.7% in 2016.
  • The share of billionaire wealth held in liquid assets declined slightly in 2017­– by 2.5 percentage points to 22.9%, the first fall in five years.
  • An improved economic environment and tentative signs of an uplift in global interest rates are likely to have encouraged a modest shift in asset allocations, with more investment opportunities available to attract the huge reserves of the world’s ultra wealthy. The shifting, regional composition of global, billionaire wealth may also have been a factor, reflecting differing attitudes toward cash holdings based on culture, access to finance, and levels of entrepreneurial activity.
  • The total stock of billionaire liquidity, nevertheless, remains elevated in historical terms, an indication of the still relatively uncertain outlook for the global economy and the limited potential for organic business growth.
  • The proportion of billionaire wealth held in real estate and luxury assets in 2017 reduced to 2.3%, equivalent to about $80m in luxury holdings per individual. This largely reflected the shifting structure of billionaires’ broader portfolios, as luxury asset markets performed strongly.
  • Real estate prices continued to trend higher in most major cities, while record-breaking auction sales of Leonardo da Vinci’s Salvator Mundiand the 59.6 carat Pink Star diamond grabbed the headlines amid robust demand in the art and fine wine and jewelry sectors.


Industry Involvement

  • The finance, banking, and investment sector was the primary industry focus for the largest share of the 2017 global billionaire population, accounting for the largest stock of accumulated wealth: $1.4trn. Billionaire representation in industrial conglomerates was a close second. Both sectors recorded solid gains in net worth on the back of improved financial-market sentiment, broad-based consumer demand, and recovery in commodity markets.
  • Real estate was the third-largest industry sector, underlining the wealth creation opportunities generated by the global trend towards urbanization– not only across the emerging world but also in most major cities in North America, Europe, and Australasia. While changes to taxation and residency-rules have contributed to a cooling in some high-end residential markets, developments in the property sector as a whole have remained positive from a wealth perspective.
  • As in recent years, the average wealth of technology-focused billionaires far exceeded that in all other industries. In 2017 there were 143 billionaires in the technology sector with an average net worth of $6bn, almost double the level of average, global, billionaire wealth ($3.1bn). This figure is obviously skewed by the enormous fortunes amassed by a very small number of individuals- six of the 10 richest people in the world have derived the majority of their wealth from the technology sector.
  • However, it is also a reflection of the huge gains that can be made by tech entrepreneurs around the world in a sector with comparatively low barriers to entry, high capacity for innovation, and rapidly increasing global demand.

Gender

  • The number of female billionaires rose by 18% in 2017, outpacing the growth of 14.5% in the male billionaire population and increasing the female share of the global billionaire population to 11.7%. This was up from 11.3% in 2016 but slightly below its 2015 level of 11.9%.
  • There remained a stark, gender contrast in the proportion of self-made billionaires and those with inherited wealth, although the gap has narrowed slightly over the past decade. More than half of all female billionaires in 2017 had accrued their wealth, primarily, through multigenerational inheritance, compared with 8% of male billionaires.
  • Among the female billionaire population, there has been a steady rise in the share whose net worth can be attributed both to inheritance and self-made wealth creation, implying a greater degree of risk-taking entrepreneurialism. The growth of the billionaire class in Asia and other emerging markets has been a key driver of this trend.

Wealth Source

  • Across the 2017 billionaire population as a whole, the distribution of wealth source was broadly unchanged from a year earlier, with self-made billionaires accounting for the largest share, 57%. The underlying trend over the past 20 years has been a gradual increase in the proportion of self-made billionaires.
  • At the same time, there was also robust growth in the number of billionaires who solely inherited their wealth. The average age of the billionaire population is rising steadily, with about half of all billionaires in the US and Europe estimated to be over 70.
  • While the average age of billionaires in other regions is younger, most emerging economies are now undergoing the first major, intergenerational wealth transfer. Over the coming years, these two factors will drive an enormous handover of wealth, sustaining the share of the global billionaire population with inherited fortunes.

The findings of the Wealth-X Billionaire Census 2018 are derived from Wealth-X’s global database of dossiers on ultra-high net worth individuals, which provides unrivaled insight into the status of the world’s wealthy, the constantly changing structure of the billionaire population, and the emerging trends for future wealth creation.



Photo credits:
Jakub Gorajek, Rawpixel; Unsplash.