MEMBERS PLAN TO INCREASE ASSET ALLOCATIONS IN CASH AND PRIVATE EQUITY
Members will largely maintain allocation in other six categories
New York, NY, November 10, 2014 ‚ÄìA new survey of TIGER 21 Members shows that a majority of respondents plan to increase their allocation to Cash and Private Equity in the fourth quarter, while on average maintaining their allocations in all other categories.
The TIGER 21 Member “Looking Forward” Portfolio Survey ‚Äì which polled Members in September asking what changes they were planning to make in their portfolio in the quarter ahead and can be accessed here shows that 46% of respondents said they planned on increasing their allocation to Cash, and 44% of respondents said they planned to increase their allocation to Private Equity, but a majority of TIGER 21 Members do not have specific plans to make material changes to their allocations to Currencies, Fixed Income, Public Equity, Real Estate, Hedge Funds, and Commodities. Of importance to note, is that although the increases in Cash and Private Equity must come at the expense of other allocations, it did not appear there was any notable consensus about which allocations would be reduced to fund these increases, suggesting that the reductions would be generally less targeted and on average across the board.
“The financial markets were challenging in the third quarter, especially with equity markets showing a lot of volatility. TIGER 21’s 290 plus Members, who have approximately $30 billion in combined investable assets, prefer wealth preservation over the aggressive risk taking that wealth creation often entails. Our Members are trying to make long term investment decisions, and trying to avoid overeacting to the ‚Äònews of the day’ so they can focus on prudent moves with their money for the long term. Many rely on the insights obtained from fellow Members in their monthly TIGER 21 group meetings to weigh the risks and rewards of such moves,” said Michael W. Sonnenfeldt, Founder and Chairman of TIGER 21.
The planned increase in allocation to Private Equity shown in the Looking Forward Survey is in line with the recent quarterly TIGER 21 Asset Allocation Report that provides a snapshot of how its Members have actually allotted their investment portfolio in the previous period. Private Equity remains a focal point of many Members’ investment portfolio and comprises 22% of the average Members’ portfolio ‚Äìmatching a record high for this asset class. Over the past five years, Members’ Private Equity exposure has increased dramatically‚Äì from 9% in early 2008.
Commenting on the planned increase in Cash, Sonnenfeldt said, “The increase in Cash is interrelated to the increase in Private Equity. Some Members are nervous about the economy and public markets and are therefore increasing Cash allocations for security reasons and to position for maximum flexibility for when the next great opportunity surfaces. To offset concerns Members have about the public markets‚Äì both in low yielding debt and in the equity markets, Members haveturned to investments more in their control that will drive portfolio growth over time. For many of our Members, this is Private Equity. Whether through their own companies, direct investments or funds, Private Equity provides them with investments they understand and Members are confident will generally produce favorable returns. Just as importantly, when there is a problem in a public company the shareholders are often the last to know, while in a small private company our Members find they can help solve the problems growing companies run into if they are informed soon enough, and this lets them bring their many years of experience to bare to help craft an effective solution. In effect, by increasing their Private Equity and Cash exposure, Members are creating a barbell hedge.”
As part of the Looking Forward Survey, Members were asked what they saw as the best sector to invest capital in for the next five years. The responses were as varied and diverse as the TIGER 21 Membership. The open ended question did elicit a number of similar responses, however ‚Äì with more than 26% of respondents saying real estate as the best sector, followed by 16% choosing private equity, and 12% choosing some type of energy investment. Other investment areas mentioned by more than one Member included technology, healthcare, gold/silver, public equities, and various hedge fund strategies.
“The prevalence of real estate and private equity responses could be directly related to the fact that many TIGER 21 Members created their wealth by founding and operating their own companies, including real estate businesses, and they know those businesses and remain comfortable with those asset classes. We are not surprised to see energy-related investments mentioned either, since shale exploration and the energy revolution is fueling the American economy,” explained Sonnenfeldt.
Indeed, TIGER 21 Members had already increased their allocation to Real Estate in the third quarter, which was reflected in the Asset allocation Report. Additionally, the Third Quarter Asset Allocation Report,shows allocations to Cash at 11%, Currencies at 0%, Commodities at 1%, Hedge Funds at 6%, Private Equity at 22% and miscellaneous investments at 1%.
“Members find the current economic environment and the investment landscape as complex and challenging as they have ever experienced. Our process helps Members to better navigate in a turbulent environment. It is important to have a realistic expectation of what others are earning, or losing. So, whether you have done well or poorly, you know if that represents underperformance or outperformance relative to a realistic benchmark.” said Sonnenfeldt.
About TIGER 21:
TIGER 21 (The Investment Group for Enhanced Results in the 21st Century) is North America’s premier peer-to-peer learning network for high-net-worth investors. TIGER 21’s over 290 Members collectively manage approximately $30 billion in personal assets and Members are entrepreneurs, inventors, fund managers, and top executives. TIGER 21 focuses on improving investment acumen as well as exploring common issues of wealth preservation, estate planning and family dynamics beyond finance. Founded in 1999, TIGER 21 is headquartered in New York City and has groups in Atlanta, Austin, Chicago, Dallas, Los Angeles, Miami, New York, Palm Beach, San Diego, San Francisco, Seattle, Tysons Corner, VA, and Washington, DC as well as Canadian groups in Calgary, Montreal, Toronto, and Vancouver. More information can be found at www.tiger21.com.