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- The world's ultra-rich lost 13.6%, or $13.8 trillion, of their wealth in 2022, per a Knight Frank report.
- The Ukraine war, the energy crisis, and interest rate hikes hit investment portfolios.
- Just four in 10 ultra-wealthy people saw their wealth rise in 2022, the report says.
Even the ultra-rich had a bad 2022 — it's not surprising, given the fallout from the Ukraine war, the energy crisis, and the Fed's rate hikes hitting their investment portfolios.
The triple crisis that roiled the global economy saw the world's richest lose about $13.8 trillion worth of assets — that's 13.6% of their wealth in 2022— according to Knight Frank's wealth report published Wednesday.
The London-based real estate consultancy surveyed 500 private bankers, wealth advisors, and family offices who manage over $2.5 trillion in collective wealth for ultra-high net worth individuals.
Just four in 10 ultra-wealthy people saw a boost to their wealth in 2022, but the "overwhelming trend" was negative, Knight Frank said in the report.
For example, just four people — Tesla CEO Elon Musk, Amazon founder Jeff Bezos, Binance CEO Changpeng Zhao, and Meta co-founder Mark Zuckerberg — saw $392 billion wiped off their collective fortunes last year, according to the Bloomberg Billionaires Index.
In 2022, the ultra-rich in Europe experienced the largest decline in wealth with a drop of 17%, followed by Australiasia with 11%, and the Americas by 10%, according to Knight Frank. The ultra-rich in Africa and Asia saw the smallest declines with a 5% and 7% drop, respectively.
The wealth rout came on the back of the Russia-Ukraine war and the resulting rising inflation. To curb a rapid rise in inflation, most major central banks — including the US Federal Reserve — started raising interest rates last year to curb rapid price increases.
However, this further depressed the markets. Higher rates mean companies tend to borrow less for investment and growth, which impacts their earnings. A rise in interest rates also hits demand for real estate because mortgages will cost more.
The ultra-rich are not immune to these policy changes that hit their investment portfolios.
According to Knight Frank, the ultra-rich parked 32% of their total wealth in their residential properties. They stashed another 26% and 21% of their wealth in equities and commercial properties, respectively.
"The fall in wealth is unsurprising given the dramatic pivot in monetary policy that culminated in the worst performance for the traditional blended portfolio since the 1930s," wrote Flora Harley, the executive editor of Knight Frank's wealth report.