SURVEY: REAL ESTATE, PE GAINING GROUND WITH INVESTORS
by Stephanie Bartup
Private equityandrealestate investments are making gains on front-runner public equitiesas the preferred investments of affluent investors, according to new research from high-net-worth peer-to-peer network, TIGER 21.
TheMember Favoritessurvey took views from more than 290 TIGER 21 members, who collectively manage approximately $30bn in investable assets.
The most common public equity investment was individual stock purchases at 43%, a seven percentage point decrease from 2013 and 14 points below 2012. ETFs, at 25%, gained four percentage points from last year, followed by mutual funds/long only funds at 17% and hedge funds at 14%.
Almost a fifth (19%) of respondents chose private equity as a favorite investment strategy this year. Discussing the breakdown of this class, respondents said 63% of private equity investment is allocated to direct investments in members’ own companies, another 17% went to private companies that were not their own, and the remaining 20% was targeted to funds.
“Private equity continues to be a growing focus for our members and for good reason. Members feel that investing in private equity is something they understand because so many members created their wealth in private companies,” said Michael Sonnenfeldt, founder and chairman of TIGER 21.
“Also, members like the superior access to information in private companies, so they are often among the first to learn about problems so they can pitch in and help solve them. This is in contrast to public investments, where the shareholder is often the last to know about a problem, long after it is too late to help fix it. Public equity, certainly in the short term, is more subject to the whims of the market, which are great when in your favor, but brutal when they turn.”
Real estate moved from the fourth favorite investment strategy to number three at 16%, gaining one percentage point from last year, said the poll. Residential real estate investments were named most often, followed by commercial investments.