Alyx Stephens Hall

Alyx Stephens Hall

Alyx is a reporter for FinBuzz, covering world economy, M&A, deals and investment, media and more.
Alyx Stephens Hall

According to a new report by UBS and PwC, the total wealth owned by international billionaires suffered a range of unpleasant external factors in 2015, decreasing to $5.1 trillion from $5.4 trillion.

Amongst the unpleasant factors driving such a dramatic decline are the deflation of commodity pricing and the appreciated value of the United States dollar.

PwC and UBS’s annual “Billionaires Report” discovered that the average billionaire’s wealth slid from $4 billion to $3.7 billion as in the aftermath of the aforementioned headwinds, which arises the question, “Are billionaires feeling the pressure?”

Michael Spellacy, the global wealth leader at PricewaterhouseCoopers, commented: “Encouragingly, this year’s report shows that Europe’s billionaires were the most resilient, with many of the 60 individuals from Europe inheriting their fortunes in 2015 for the first time.

“The U.S., which boasts the biggest collection billionaires by region, sets the trend. Total U.S. billionaire wealth fell, but ‘new money’ fared better than old, falling by just 4 percent, from an average $4.7 billion per individual to $4.5 billion.”

The Billionaires Report was based on the data collected from 1,397 billionaires and looks back 20 years. 14 global markets are considered being accountable for 80% of global billionaire wealth.

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Under pressure

According to the UBS and PwC’s Billionaire Report, Europe has the highest percentage of multi-generational billionaires — 182 individuals, or 54% of billionaires, have demonstrated to be the most enthusiastic in preserving wealth.

European billionaires are very likely to underpin their wealth due to cultural normalities.

Upholding legacy and familial ties are significant to many billionaire families, which means the European affluent have a tendency to the businesses that might have been established generations before either by investing in their companies or purchasing other family-owned firms.

Despite the considerable increase in the billionaire population and 20 years of wealth creation, the “Second Gilded Age” is stalling. The cause of this phenomenon is asset transfers within families that break up fortunes, as well as currency rates of the U.S. dollar and commodity price deflation.

As the report discovered, 210 fortunes struck the billionaire mark, but 160 billionaires gave away their ground. The proportion of the newcomers against those who have lost their position results in the total billionaire demographic of 1,397 individuals around the globe.

And even though the figure has increased, their combined wealth dropped from $5.4 trillion to $5.1 trillion.

And the fortune goes to …

Transferring wealth is a common reason that makes fortunes diluted. With a death of a billionaire, the wealth is passed to the heirs, and often the resulting fortune does not meet the billion-dollar wealth ceiling.

UBS and PwC estimate that soon there will be a substantial transfer of fortunes as inheritance, with 500 billionaires transferring $2.1 trillion to their heirs over the next twenty years.

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