Global Billionaire Population at Record, With $7.3 Trillion in Wealth

Survey finds U.S. accounts for a quarter of world’s ultra-rich

There’s the 1%, and then there’s the 1%.

Billionaires make up 1% of the world’s ultra-high-net-worth population (net worth of $30 million or more), according to the Wealth-X and UBS Billionaire Census 2014, yet they control 4% of the world’s wealth.

The global billionaire population grew to a record 2,325, up by 7% from the 2013 study, and is on track to increase to 3,873 in 2020.

In the year to June 2014, aggregate billionaire wealth increased by 12% to $7.3 trillion, more than the capitalization of all the companies that make up the Dow Jones Industrial Average, according to the report.

Between 2011 and 2013, growth in billionaires’ wealth accounted for 40% of the growth in total ultra-high-net-worth wealth.

Despite this growth, billionaires’ portfolios underperformed the global S&P 1200 equity index over the past year.

Regional Trends

Europe retained its position as the region with the highest number of billionaires, 775, and most billionaire wealth, $2.4 trillion, while the U.S. was the country with the highest number of billionaires, 571, accounting for $2.3 trillion.

American billionaires now make up nearly a quarter of the total global billionaire population, according to the report.

In Asia, the number of billionaires grew by 10% to 560, and total wealth increased by 19% to $1.4 trillion, the largest wealth increase among regions.

The billionaire population in Latin America and the Caribbean shot up 38%, largely because of significant wealth transfers from baby boomers to their heirs. Total wealth in the region grew by only 3%, however.

The opposite occurred in Africa and the Middle East. Rampant political instability that caused declines in some individuals’ wealth was largely responsible for reducing the billionaire population, thinning the ranks in Africa  by 5% and in the Middle East by 2%.

Those who held onto their wealth, however, enjoyed big increases in their fortunes — up 17% in the Middle East, and up 13% in Africa — thanks to more international diversification in their investment and business holdings.

Only the Pacific region experienced a drop in total billionaire wealth, down 2%, while population growth remained static. The decline in wealth owed in part to weaker prices of commodities such as coal, which was down 30% this year.

Key Themes

Cities matter to billionaires, with 34% of their numbers concentrated in 20 cities, according to the 2014 report. These folks move from city to city, not from country to country.

Cities are particularly important in emerging markets, so much so that 90% of billionaires in the Middle East and Africa are based in the most significant regional hubs.

People who inherited only part of their wealth and became billionaires through their own entrepreneurial endeavors made up the fastest growing segment of the billionaire population. The survey found that 63% of all billionaires’ primary companies were privately held.

This trend crossed gender lines, with the share of billionaire women who fully inherited their wealth decreasing slightly over the past year. In 2014, 286 female billionaires accounted for a 12.3% share of global billionaire wealth.

Billionaires increased their liquidity holdings this year to an average $600 million per individual. Wealth-X said this signaled that many were waiting for the optimal time to make further investments.

Interestingly, a “ceiling” exists for how rich a billionaire can get. The survey found that 95% of the world’s billionaires have a net worth between $1 billion and $10 billion.

This has to do with the fact that the average billionaire is 63 years old and that older billionaires tend to transition from wealth accumulation to wealth preservation.

Finally, expect the world’s billionaire population to expand. As in Latin America, wealth is passing to the next generation, and Wealth-X expects this trend to accelerate in the future as many first-generation wealth creators pass on their wealth.

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