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The Simple Strategy Fueling the Rise of Bill Gates’s Fortune

Tom Metcalf and Erik Schatzker

(Bloomberg) -- Bill Gates is still in wealth-creation mode.

“We’re not, you know, in some defensive posture where we’re mostly in cash, or anything like that,” the Microsoft Corp. founder said in an interview with Bloomberg Television. “The strategy that’s been used on the investments is to be over 60% in equities.”

That’s helped Gates add $16 billion to his net worth this year, taking his wealth to $106 billion, behind only Jeff Bezos on the Bloomberg Billionaires Index, even as his charitable donations have topped $35 billion.

The Gates fortune had about $60 billion of equity assets as of Monday, according to data compiled by Bloomberg. By comparison, the average family office portfolio in North America held about 32% of its assets in equities in 2018, according to Campden Wealth’s 2018 global family office report.

The growth overseen by the billionaire’s investment chief, Michael Larson, who oversees family office Cascade Investment, has enabled Gates to build the world’s largest private foundation without diminishing his fortune.

That may start to shrink if politicians heed his call for higher taxes.

“I doubt, you know, the U.S. will do a wealth tax but I wouldn’t be against it,” he said in the interview. “The closest thing we have to it is the estate tax. And I’ve been a huge proponent that that should go back to the level of 55% that it was a few decades ago.”

Inequality has become an explosive political issue with America’s richest 0.1% controlling more wealth than at any time since 1929. On Tuesday, the Bill & Melinda Gates Foundation released its annual Goalkeepers report. The study seeks to monitor and aid the progress of the United Nations in achieving in its Sustainable Development Goals, which the foundation says are being hindered by persistent inequality. The report called for greater investment in health care, education and technology to help reduce inequality worldwide.

“There is no silver bullet that will make geography, gender and other random factors stop mattering,” the report notes. “But guaranteeing that every single child has access to good health and education systems is a very good start in that direction.”

Gates, 63, also backed higher income taxes on America’s wealthiest people and made a call for greater transparency. “I’m for way more financial transparency. I don’t like that you can have trusts where nobody knows who owns it.”

While Gates remains bullish on the U.S. and global economy, he doubted that the performance he’s enjoyed over the past was likely to endure. “There’s reasons to think absolute returns for the next decade will be less than they have been for the last several decades.”

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To contact the reporters on this story: Tom Metcalf in London at tmetcalf7@bloomberg.net;Erik Schatzker in New York at eschatzker@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Steven Crabill

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