UBS and PwC have calculated that billionaire-controlled companies grew by an average of 17.8% per year over the period 2003 to 2018, compared with 9.1% for the MSCI ACWI index stocks (2853 companies from 49 countries at the time of writing). These companies are also more profitable than the average with a ROE of 16.6% compared to 11.3% for the same index.
Source: UBS and PwC charts
"While the billionaire effect was strongest in the United States, it was closely followed by APAC, where the Chinese economy in particular continues to reinvent itself, allowing some companies to grow exponentially while others falter," the report's authors explain, adding that Europe has "fallen a little behind" but that companies controlled by billionaires have also significantly outperformed there.
Risk appetite and long-term vision
"Billionaires continue to create and run companies that outperform the stock markets," says Josef Stadler, who is responsible for the Swiss bank's ultra-high net worth clients. This success is explained by a "calculated risk appetite", and a "greater propensity to project and invest over the long term". The report also shows that outperformance is maintained over time. Over the recent period, outperformance has been driven by major technology companies in the United States and Asia, but also by French luxury giants such as LVMH and Kering. Bernard Arnault's fortune has, for example, recently reached the symbolic level of $100 billion.
These are not the only lessons of this new edition. We also learn that the wealth of billionaires has decreased from $388 billion to $8,500 billion in 2018. But don't panic for the "UHNWs", since their assets had quadrupled... in four years! In addition, the number of female billionaires has grown faster over the past five years: +46% compared to +39% for men. However, they remain a minority: 233 out of 2101, mainly in consumer goods and retail sales.
The Asia-Pacific region remains in the lead in the number of billionaires despite a decline in the number of ultra-rich people in 2018, but it now has only a short lead over the United States. Europe also experienced a decline last year.
Source: UBS and PWC charts