The world’s ultra-wealthy people shed a combined $10 trillion, or 10 per cent, from their net worth in 2022, according to property consultancy Knight Frank. The report found that just four in 10 ultra-high-net-worth individuals (UHNWIs) – people with a net worth of at least $30 million including their main home – had increased the size of their fortune last year.
Liam Bailey, Knight Frank’s global head of research, attributed the dramatic fall in wealth to a dramatic pivot in monetary policy that culminated in the worst performance for the traditional blended portfolio since the 1930s. This was driven by a triple “shock” of global economic uncertainty, the energy crisis and the war in Ukraine.
The Wealth Report 2023 revealed that Europe was at the centre of the crisis, with UHNWIs losing an average of 17 per cent from their fortunes. The Australia region recorded 11 per cent drop and the Americas shed 10 per cent. Africa witnessed the smallest decline with 5 per cent, followed by Asia and the Middle East at 7 per cent.
Whether in a private capacity or through a family office, the world's wealthy invested $455 billion in commercial properties, according to Knight Frank's wealth report. Further, investments in luxury collectibles increased by 16 per cent, with works of art as the top performer. Classic cars saw double-digit growth at 25 per cent as well, the strongest in nine years.
On Tuesday, the so-called 60/40 portfolio of US equities and fixed-income assets yielded 5.07%, a figure based on the weighted average earnings yield of the S&P 500, along with the Bloomberg USAgg Index of bonds. Meanwhile, yields on the six-month US Treasury bill rose to a high of 5.16%.
The fall in wealth was unsurprising given the dramatic pivot in monetary policy that culminated in the worst performance for the traditional blended portfolio since the 1930s, according to Knight Frank. UHNWIs stashed 32 per cent of their total wealth in their residential properties, parking another 26 per cent and 21 per cent of their funds in stocks and commercial properties.
0. “World’s richest people lost total of $10tn in 2022, report finds” The Guardian, 1 Mar. 2023, https://www.theguardian.com/news/2023/mar/01/worlds-richest-people-lost-total-of-10tn-in-2022-report-finds
1. “World's ultra-wealthy lost a combined $10 trillion in 2022” The National, 1 Mar. 2023, https://www.thenationalnews.com/business/money/2023/03/01/worlds-ultra-wealthy-lost-a-combined-10-trillion-in-2022
2. “World's richest lost a combined $10 trillion in 2022: Report” Hindustan Times, 1 Mar. 2023, https://www.hindustantimes.com/business/worlds-richest-lost-a-combined-10-trillion-in-2022-report-101677665854593.html
3. “Here are the top ways the world's ultra-rich spent their money last year, including pouring $455 billion into commercial real estate” Business Insider Africa, 1 Mar. 2023, https://africa.businessinsider.com/markets/here-are-the-top-ways-the-worlds-ultra-rich-spent-their-money-last-year-including/brqzf9x