TIGER 21’S ASSET ALLOCATION REPORT FOR SECOND QUARTER 2017
Ultra-High-Net-Worth Investors Favor Public Equity, Private Equity, and Real Estate
New York, NY ‚Äì July 18, 2017 ‚Äì TIGER 21, the premier peer-to-peer learning network for high-net-worth wealth creators, today announced the results of its Second Quarter 2017 Asset Allocation Report, demonstrating how its affluent Members are largely concentrating their wealth in three main asset classes: private equity, public equity, and real estate.
The group’s quarterly Asset Allocation Report measures the aggregate asset allocation exposures of TIGER 21’s Members. TIGER 21’s membership base comprises more than 500 of North America’s and London’s most successful entrepreneurs and investors, who collectively manage approximately $51 billion in personal investible assets.
Notably, this quarter marked a peak for real estate investments and a new low point for hedge fund allocations. Members’ exposure to hedge funds has been on a steady decline in recent years but, at 4% this quarter, dropped to its lowest level since TIGER 21 began collecting this data in 2007. At the peak of the Great Recession, hedge funds experienced a low of 5%.
“Our Members, through their various successful endeavors, have proven themselves to be sophisticated investors who are highly attuned to market dynamics,” said Michael Sonnenfeldt, Founder and Chairman of TIGER 21. “TIGER 21 Group meetings allow them to openly explore investment ideas and, when discussing hedge funds, many have cited concerns regarding fees, lock-up periods, and disappointing returns in this low-interest-rate environment. Given the strong correlation between monetary easing and poor hedge fund performance, it comes as little surprise that our Members are seeking returns elsewhere. It’s worth bearing in mind that, though there are some standout hedge funds delivering noteworthy gains, they currently represent the exception rather than the rule. We do, however, believe that the industry has the potential to rebound in the event of a future rate hike.
Public equity allocations also declined slightly in Q2 2017, now comprising 20% of Members’ portfolios. While still a sizeable percentage of their overall assets, this is the lowest reading seen since Q2 2010, when they dipped to 19%. This slight decline of public equity this quarter coincided with a small uptick in private equity investments, which now represent 21% of TIGER 21 Members’ combined holdings. Mr. Sonnenfeldt commented: “While our Members clearly still embrace public equities as part of a diversified portfolio, it is no coincidence that private equity currently has the edge. As long-term, strategic investors with deep expertise in various industries, private equity offers them the opportunity to take an active role while weathering the short-term volatility associated with public equities.”
The most recent data also indicated that real estate investments now make up 33% of TIGER 21 Members’ assets, an all-time high that represents a 7% year-over-year increase. “Many of our Members created their wealth in the real estate industry, and subsequently continue to maintain significant holdings,” remarked Michael Sonnenfeldt. “They have demonstrable experience and expertise in managing diverse real estate property portfolios, enabling them to tolerate the associated risk. Various other factors ‚Äì including historically low interest rates, public equity markets priced to perfection, and the anticipation that regulatory rollback is imminent ‚Äì have significantly enhanced appetite for real estate investments.”
He went on to add: “When Members express their predilection for private equity and real estate through funds, as direct passive investors and as active managers, it is largely because they feel they have a legitimate edge in these asset classes, having built their wealth therein. Moreover, where investments are direct or controlled, Members can affect the outcomes in meaningful ways by rolling up their shirtsleeves and pitching in, either on a part-time basis or as their primary focus.”
Members’ allocations to cash, currencies, commodities, and fixed income did not change from the previous quarter. For more information about the report, and the TIGER 21 membership experience, please visit here.
The TIGER 21 Asset Allocation Report measures the aggregate asset allocations (on a trailing twelve-month basis) of TIGER 21 Members based upon their individual annual Portfolio Defense presentations. Each individual Member generally reports on their portfolio annually, so that in any given month of the year approximately 1/12th of our membership reports. Each quarterly data set represents data for the prior 12 months (from quarter’s end). This methodology tends to reveal substantive trends more clearly and is less affected by short term distortions caused by our growing membership.
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 wealth creators. TIGER 21’s 500+ Members collectively manage personal assets of approximately $51 billion and over $115 billion in assets when assets managed for others are included. Members are entrepreneurs, investment 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 in the context of a unique community of peers. Founded in 1999, TIGER 21 is headquartered in New York City and has groups in Atlanta, Austin, Boston, Charlotte, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Nashville, New York, Newport Beach, Palm Beach, San Diego, San Francisco, San Juan, PR, Seattle, Tampa, and Washington, DC as well as international groups in Calgary, Edmonton, London (UK), Montreal, Ottawa, Toronto, and Vancouver. More information can be found at www.TIGER21.com.