The billionaire effect

Billionaire-controlled businesses deliver enduring outperformance.

08 Nov 2019

Key takeaways

  • Billionaire-controlled companies return almost twice the average market performance.
  • Tech billionaires are the champions, with $1.3T in wealth.
  • More than two-thirds of the 2,101 billionaires globally are self-made.
  • Learn more in the UBS Group AG/PwC Billionaire Report: The Billionaire Effect.

Doubling the market’s return

“Billionaires are creating businesses that consistently outperform equity markets,” commented Josef Stadler, Head of Ultra High Net Worth at UBS Global Wealth Management. “This business acumen has also translated into their philanthropy, as billionaires seek new ways to engineer far-reaching environmental and social change. This Billionaire Effect is alive and well across the world and shows little sign of slowing.”

Billionaire companies roared ahead of global equity markets:

  • They outperformed the global benchmark by 8.7% over 15 years to the end of 2018.
  • They are far more profitable, delivering a return on equity of more than 16% over ten years, far higher than the MSCI AC World Index, which averaged slightly over 11%.

More than two-thirds of the 2,101 billionaires from 43 countries are self-made. Typically, they have grown exceptionally successful businesses ranging from Californian software companies to e-commerce giants to Chinese restaurant chains.

Tech billionaires are the champions

Tech stands out as the one industry where billionaire wealth increased in 2018, rising 3.4% to $1.3T by the end of 2018, mainly in the US. Their net wealth has almost doubled over five years, growing by 91.4%. Interestingly, if the billionaires’ tech wealth constituted a country, it would rank second only to the US.

US billionaires’ tech businesses, especially, are thriving. Software, Internet and electronic equipment billionaires have built powerful businesses over the last 30 years. But pioneers of the future are emerging fast in e-commerce, fintech, ride hailing and data systems.

From smart risk-taking to long-term vision

Why does this Billionaire Effect exist? There are three distinct personality traits that businesses thrive on: appetite for smart risk-taking; business focus; and determination. These businesses also benefit from long-term strategy.

Whether billionaires are self-made or multigenerational, our research suggests that as long as control remains in the family, the Billionaire Effect is here to stay.

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Read about how billionaire-controlled businesses outperform.