Indeed, billionaires' cash holdings far exceed their investments in real estate. Their real-estate holdings average $160 million per billionaire, or about one-fifth of their cash holdings.
Simon Smiles, chief investment officer for Ultra High Net Worth at UBS Wealth Management, said that the billionaire families and family offices he talks to are focused largely on the same question: What to do with all their cash.
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"The apparent safety of cash, reinforced by the painful psychological experience of the 2008-09 globalfinancial crisis and the subsequent troubles within the European Monetary Union, likely reinforces the tendency to favor this cautious allocation strategy," Smiles said in the report.
But he said creeping inflation threatens to erode cash values, so he's advising clients to take on "considered amounts of risk" with interest rate swaps, credit default swaps, or selling rates or foreign exchange derivatives.
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Yet in today's increasingly frothy market environment, and after the hangover of 2009, today's billionaires prefer a return of their assets rather than a return on assets. And in fact, they may be happy with a small loss rather than risk a larger one.