Members of Ultra-High-Net-Worth Investor Network Allocate 29% of portfolio to property-related investments
NEW YORK (April XX, 2015) – The latest Asset Allocation Report from TIGER 21 shows Members continued to favor real estate investments in the first quarter of 2015. Real Estate experienced a two percentage point increase in the first three months of the year, bringing it to 29% and representing the highest allocation to real estate since TIGER 21 began tracking Member data in 2007.
TIGER 21 Members have long had a higher than average exposure to real estate due in large part to the membership profile, which reflects the fact that over recent decades, Real Estate has been a prime sector for wealth creation, “We frequently say that Members will gravitate to what they know. So real estate has been a focal point of some of our Members’ portfolios because that is the industry where many of them created their wealth. There is no doubt that some of the greatest accumulations of wealth over the last decades have been in Real Estate and Technology, but for our Members that created their wealth in Technology, it was more frequently the liquidity event from the sale of a business that brought them to Tiger 21. Members who created their wealth in Real Estate were able to continue to own portions or all of their portfolios, even as they joined Tiger 21,” said Michael Sonnenfeldt, Founder and Chairman of TIGER 21.
TIGER 21’s Asset Allocation Report provides a snapshot of how an important segment of America’s affluent investors position their portfolios for wealth preservation. TIGER 21, whose more than 300 Members throughout North America maintain investable assets in excess of $30 billion, collected Member data measuring aggregate asset allocation exposures based upon Members’ annual detailed Portfolio Defense presentations. The current report represents investment exposure as of the end of the first quarter of 2015.
The full report can be accessed here: First Quarter Asset Allocation Report
TIGER 21 Members’ interest in real estate investments does not seem to be waning. In a separate poll of TIGER 21 Membership, half of the respondents said they plan to increase their allocation to real estate in the second quarter, while 38% plan on maintaining their current allocation and only 12% plan on decreasing it. The only other asset category with many Members planning to increase their holdings (relative to maintaining or decreasing allocation) was private equity. An equal percentage (44%) of respondents plan on increasing and maintaining their exposure to the asset class, while only 12% plan on decreasing it.
Another notable allocation in the first quarter Asset Allocation Report is Fixed Income at 11%. Down one percentage point from the previous quarter, it is the lowest allocation level for Fixed Income since TIGER 21 began surveying Members. “Generally Members are cautious on fixed income because of the low returns and potential for interest rate increases that would dramatically lower bond values,” noted Sonnenfeldt
Commenting on Member sentiment, Sonnenfeldt said, “Members have kept their public equity exposure steady over the last 24 quarters. Despite a bull market in stocks for more than six years, Members have shown restraint and anecdotally have prepared for the inevitable correction in the market. Members have seen more tangible value in Private Equity, where they can roll up their shirtsleeves and be directly involved with and in the critical information flow about the challenges and potential of the companies they invest in. Real Estate has been equally attractive for some of the same reasons. Of course, with many fund managers and world class traders as Members, we do have some Members holding cash in order to be positioned to buy inexpensive stock during the next downturn.”
In fact, when asked whether they thought the stock markets today were valued fairly, 52% of respondents indicated that they thought the markets were fairly valued and 45% thought the markets were overvalued. Only 3% of respondents thought they were undervalued.
Looking ahead, Members with a bearish outlook over the next 12 months outnumbered bullish Members 59% to 41%. Among the specific concerns of the bears were the likelihood of rising interest rates in the second half of this year, the potential for terrorism to disrupt markets, employment numbers remaining high, equity markets overvalued, the large balance sheet of the Federal Reserve, and the US dollar being too strong.
The bulls seemed to look at the glass as being half full. Interest rates were also cited by a number of Members who noted that even with an increase they will remain low by most standards. Other reasons mentioned for a bullish outlook include low oil prices, expected growth in the economy and in company earnings, and a continued strong run for US equities. Interestingly, several Members indicated that while they are long-term bulls, they are prepared for a possible market correction of anywhere from 10 to 20%.
TIGER 21 creates a safe environment for Members to explore critical issues affecting their lives. Through regular monthly meetings and an annual Members-only conference, TIGER 21 Members share their knowledge and experiences, and help each other wrestle with issues relating to finance, investments, managers and advisors. Groups also conduct regular Portfolio Defenses ™ where Members share their investment portfolio for critique and feedback from their group. Another important part of the curriculum focuses on estate planning, family, health, philanthropy, and issues of communal involvement.
“Whether you are a bull or a bear, there are still many things that worry Members and keep them up at night. Low interest rates around the globe have forced many into riskier investment in order to gain yield and despite improvements in some overseas economies, there are still large portions of the world that face serious troubles. Add unrest in the Middle East, Russia reasserting herself, and the opinion that the US will fail to prevent the nuclear situation in Iran, along with concerns of worldwide terrorism and you have a growing list of potential events capable of disrupting the markets and force investors to be extra cautious in vetting opportunities,” 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 300 Members collectively manage more than $30 billion in total assets and are entrepreneurs, inventors 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, Boston, 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.