The ultra-rich lost money in 2022… But where did they invest?

The ultra rich lost money in 2022… But where did they

A (slight) setback for the ultra-rich. These have seen their fortunes melt by 10% in 2022, according to a new study by the consulting firm Knight Frank published on Wednesday March 1. This represents “a decline of approximately $10.1 trillion,” the report said. If four out of ten ultra-rich have nevertheless seen their wealth increase, the trend “remains negative”.

The ultra-rich (also called UHNWI) refer to the approximately 392,000 people in the world who have at least $30 million to invest. Their portfolio has suffered the effects of a “permacrisis”, that is to say an economic, geopolitical and energy crisis, estimates the firm. “Last year, the Ukraine crisis fueled the European energy crisis and inflated already booming inflation,” said Liam Bailey, global head of research at Knight Frank. Consequence: several central banks have raised their rates to cope with inflation, which has weighed on investment portfolios.

The ultra-rich continue to buy stocks

The ultra-rich have nevertheless found a way to make new investments. More than a quarter (26%) of the wealth they can invest is dedicated to buying stocks. Next come commercial real estate (21%) followed by bonds (17%).

Europe was more impacted

The ultra-rich Europeans and Americans dedicate respectively 28% and 33% of their investments to the purchase of shares, while the ultra-rich Africans focus more on commercial real estate. Bonds are also more popular in Africa (25%) and the Americas (21%) than in Europe (19%).

Generally speaking, and even if investments have continued, it is in Europe that the decline in the fortunes of the ultra-rich has been the most significant. It has melted by an average of 17%. Next come Australia (-11%) and the Americas (-10%). Africa and Asia, in comparison, suffered the smallest declines (-5% and -7% respectively).

Yet, if “significant risks remain to the global economy” in 2023, “market sentiment will change rapidly” with “very real opportunities emerging in global real estate markets”, with the tipping point in interest rates expected this year, according to Liam Bailey. According to the Knight Frank study, 69% of affluent investors expect to see their portfolio grow this year.