A manager in the world’s largest private bank UBS, also known as the “fortress bank of billionaires” said that the richest clients of the bank took billions of dollars in loans to invest in the stock market in March and April as the market slumped due to Covid-19 pandemic.
The world’s largest wealth manager on Thursday in an interview with Reuters said the billionaires have profited massively from the investments they made in equity and are now looking to taking out their money and invest it elsewhere.
The Head of family offices Josef Stadler in the Swiss bank UBS, said the bank’s wealthiest clients managed by family offices are looking to invest in residential real estate, private equity, or make corporate and strategic deals. UBS “banks half of the world’s very richest” according to Reuters.
Josef Stadler, said: “We had record loans written during the middle of March and the middle of April, of significant family offices who asked us for balance sheet and then went into the market.
“They bought, for example, US equities, but they didn’t buy $50 million. They bought a billion-plus of those equities to rebalance. And they made a lot of money.”
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According to the bank’s survey of 120 family offices, with an average family wealth of $1.6 billion, published on Thursday, more than two thirds of family offices view private equity as a key driver of returns. Whereas less than Less than half of family offices expect equities to fare well over the long-term
The report also show that “many family offices have added to their cash and gold allocations.”
“The retreat to cash looks set to be temporary, with 26% indicating they will lower cash reserves in the next 2-3 years, but gold could be a long-term beneficiary, with 45% saying they will increase their exposure to the precious metal,”
Although Stadler thinks these bearish predictions apply most strongly to its wealthy clients in Asia and expects stock markets to lose ground for the rest of 2020.
A report by the Institute for Policy Studies shows that between March 18th and June 17, the U.S billionaire class has seen their wealth increase by 20%, or $583 billion, since the rough beginning of the pandemic. The total net worth of the 640-plus U.S. billionaires jumped from $2.948 trillion to $3.531 trillion within this period.
Written by;
Ifunanya Ikueze
