Babson College professor’s research shows how everyday investors might profit by investing alongside Forbes’ billionaires list

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The annual Forbes list ranking the world’s billionaires indicates that the rich keep getting richer. Dr. Joel Shulman, C.F.A, a Babson College Professor of Entrepreneurship, has identified a simple pattern that may allow average investors to get richer too. Shulman’s “Billionaire Index” research is highlighted as the lead article in the latest issue of Institutional Investor’s Journal of Index Investing. The Billionaire Index is comprised of shares of 571 publicly traded companies that are owned, created or managed by individuals on the Forbes billionaires list. It consistently outperforms peer indices, and provides a channel for individual investors to invest alongside the world’s wealthiest.

Shulman’s research compares the Billionaire Index to industry benchmarks, notably the Russell 2000, Russell 3000 and S&P 500. “The Billionaires performed better than the benchmarks over time,” says Shulman. “Most years, when you compare the Billionaire Index to the benchmark indices, the results aren’t even close.” The Billionaire Index, however, is still subject to overall market conditions, and underperformed peer benchmarks during declining markets. Shulman notes that investors implementing this trading rule would be wise to use caution and maintain a diversified portfolio of securities.

Entrepreneurial Nature; Impressive Results

The Billionaires Index provides an annualized compounded rate of return (ROR) of 11.03 percent over the years 1996–2011. This performance was essentially double that of the benchmark returns, which ranged from 4.92 to 6.41 percent per year. Since 1996, the Billionaire Index increased by approximately 400 percent, dominating peer benchmarks by a wide margin.

The research suggests that many individuals on Forbes’ billionaires list are entrepreneurial in nature. These billionaires helm companies with common entrepreneurial attributes, for example: organic revenue growth, clean and positive corporate reputation, transparent governance, lean costs and modest debt. Additionally, the entrepreneurial billionaires themselves hold an above-average ownership stake in the organization. Shulman surmises that these characteristics contribute to the billionaires’ success, though the research does not credit their wealth and success exclusively to an entrepreneurial spirit.

About Institutional Investor’s Journal of Index Investing

Institutional Investor’s Journal of Index Investing is published quarterly, offering in-depth, original and practical research in global investment and finance with an extensive online archive. It strives to provide current analyses and strategic insights that translate into implementable ideas for global investors.

About Babson College

Babson College is the educator, convener, and thought leader for Entrepreneurship of All Kinds™. The College is a dynamic living and learning laboratory, where students, faculty, and staff work together to address the real-world problems of business and society—while at the same time evolving our methods and advancing our programs. We shape the leaders our world needs most: those with strong functional knowledge and the skills and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in a common purpose to create economic and social value. As we have for nearly a half-century, Babson continues to advance Entrepreneurial Thought and Action® as the most positive force on the planet for generating sustainable economic and social value. For information, visit

By Barbara Spies Blair,, 781-239-4621 | 03/07/2012 06:05