×

Billionaires are holding $1.7 trillion in cash

The world's billionaires are holding more than $1.7 trillion in cash — the highest amount since one firm began recording the measure in 2010.

Because of what they perceive to be growing risks in the economy and world, the world's 2,473 billionaires are keeping 22.2 percent of their total net worth in cash, according to the Wealth-X Billionaire Census.

The group has also benefited from the recent surge in so-called liquidity events from corporate acquisitions and mergers. Altogether, their cash hoard is now roughly the size of the Brazil's GDP.

"Billionaires are taking money off the table where available, while uncertainties in the economy and the historical highs found in deals have resulted in cash-flush portfolios," the report said.

The firm's findings are in line with those from other recent surveys. A study released by UBS last month said wealthy Americans are keeping around 20 percent of their portfolios in cash, in line with their post-2008 average. More are considering reducing their exposure to the markets because of uncertainty over the presidential election, UBS said.

The Wealth-X report said billionaires may also be sitting on the sidelines waiting for stock and asset valuations to fall to bargain levels.

"Once equity valuations return to more attractive levels, we expect a movement toward putting liquidity back into deals," the report said.

The world's billionaires saw their fortunes grow last year by 5.4 percent to $7.7 trillion — higher than any country's GDP except the U.S. and China. While Europe had the largest number of billionaires of any region, 806, Asia had the fastest growth. Its billionaire count grew 15 percent over the prior year, to 645. North America had 628 billionaires, 3 percent higher.

Yet their sources of wealth are changing. Finance, which includes hedge funds, banking and the investment industry, is still the biggest producer of billionaires, at 15 percent. But the industry's share is shrinking, and was down 4 percentage points from the prior year. Billionaires working in finance saw their wealth shrink by 6.6 percent, to $1.2 trillion.

Billionaires who made their money from industrial conglomerates represent 12.8 percent of the world's total, making it the second-largest industry. That's up from 12.1 percent the previous year. There also was an increase in billionaires who made their money from insurance, retail, business services and information technology.

More than half of the world's billionaires are what Wealth-X calls "entirely self-made," meaning they made their fortunes themselves. Billionaires who inherited their entire fortune account for just 13 percent of the total.

A growing number of billionaires inherited a fortune and made it even larger. Fully 31 percent of today's billionaires are "partly self-made," up 6 percent over the prior year, according to the report.

"Inheritors are not looking to rely on their new-found wealth," the report said. "They are attempting to use the wealth to pursue their own business interests or grow their existing family estates."