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21 Sep, 2014

Wealth-X and UBS Launch 2014 Report on the World’s Billionaires

The second edition of the Wealth-X and UBS Billionaire Census 2014 has been released. The only comprehensive, global study on the composition and dynamics of this top-tier segment of the world’s ultra affluent population, the 2014 edition identifies key trends and statistics on the world’s ultra high net worth (UHNW) population.

Writing in the foreword, Mykolas D. Rambus Chief Executive Officer, and David S. Friedman President, Wealth-X, say: “Wealth-X’s researchers and analysts in 13 offices across five continents compiled and analysed data on the world’s billionaire population, identifying key themes and macro trends, and building a profile of a “typical billionaire”, which reveals their average age, their mean net worth and wealth source, their social graph, philanthropic activities and their interests, passions and hobbies.

“The 2014 report shows that the world’s billionaire population reached a record high of 2,325 billionaires this year, a 7% rise from 2013. The combined wealth of this ultra affluent tier increased to US$7.3 trillion, a 12% rise from last year.

This year’s report, however, reveals far more than just the increase in the number of billionaires globally and the rise in their fortunes. It provides a snapshot of modern entrepreneurship and the concentration of wealth we are witnessing in many societies around the world.

“Interestingly, 63% of billionaires’ primary businesses are privately held and 81% of all billionaires made all or the majority of their wealth themselves, telling us that entrepreneurialism and private wealth are keys to billionaires’ success.

“The report contains a Top 20 Billionaire Cities List and provides detailed profiles of 17 billionaire hubs – from Hong Kong to Moscow, Geneva to Los Angeles – where individuals in this ultra affluent tier work, live and play. Billionaires tend to gravitate towards these hubs; they are transnational: moving from city to city, rather than from country to country.

“The report forecasts that the global billionaire population will surpass 3,800 by 2020. This reflects the current wealth distribution in the wider UHNW population and the possibility of certain sectors, such as technology, becoming increasingly profitable. The overall size and net worth of the world’s billionaire population will continue to grow, presenting immense opportunities and making this report essential reading for those who want to engage with this commercially significant segment.”

Executive Summary

Billionaires – defined as those individuals with a net worth of US$1 billion or above – control nearly 4% of the world’s wealth. The members of this group of ultra wealthy individuals form one of the most exclusive clubs in the world: there is only one billionaire for every three million people on the planet. Although the overall size of the billionaire population is small, the impact of billionaires on the global economy is significant. Between 2011 and 2013, the growth in the wealth of the world’s billionaires accounted for 40% of the growth in total ultra high net worth (UHNW)* wealth – although billionaires only comprise 1% of the global UHNW population.

Between July 2013 and June 2014, the billionaire population grew by 7% to reach 2,325, an all-time record high. The combined wealth of the world’s billionaires increased by 12% to US$7.3 trillion, which is higher than the market capitalisation of all the companies that make up the Dow Jones Industrial Average. Despite the impressive growth of total billionaire wealth over the past year, billionaires’ portfolios have underperformed the global S&P1200 equity index.

Europe has retained its position as the region with the highest number of billionaires (775), while the United States remains the country with the highest number of billionaires (571). Billionaires in the United States now account for nearly 25% of the total global billionaire population. The United States also experienced the largest absolute growth in terms of the number of new billionaires: 57 new American billionaires were recorded in this year’s census. In Asia, the billionaire population continued to increase in size and economic significance, with 30% of the net increase in total billionaire wealth coming from that region.

Outside of Asia, the billionaire populations in emerging markets have shown mixed signals. For example, while the number of Latin American billionaires grew at a faster rate than that of any other regions this year, the average net worth of the region’s billionaires fell by 25%. In Africa, billionaires’ total wealth grew, but the overall number of billionaires in the region decreased, due primarily to volatile socio-political conditions.

A similar situation occurred in the Middle East, where a 2% decline in the number of billionaires was accompanied by a 17% increase in their combined wealth.

The massive wave of inter-generational wealth transfer from baby boomers to their heirs is underway, and this has had a profound impact on the world’s billionaire population: billionaires with partially inherited wealth were the fastest growing segment of this population.

Yet, one of the common characteristics of the world’s billionaires is their entrepreneurialism. In most instances, achieving billionaire status requires more than just inheritance; 81% of billionaires made the majority of their fortunes themselves.