Quarterly cash allocations hold steady at 10%, and fixed income rises slightly to 11%
Ultra-wealthy members of the TIGER 21 peer-to-peer learning network increased their allocation to private equity to a record high of 23% in the first quarter, up from 22% in the previous quarter.
TIGER 21 said Wednesday in a statement that its members’ “risk equity” allocation stood at 78% when private equity and hedge funds were added to public equity and real estate allocations.
This equity exposure roughly compared to historic norms for institutions and balanced portfolios of equity risk closer to 60%, according to the report.
TIGER 21 members’ broader risk equity allocations (including hedge funds) peaked at 77% in 2007 before plunging to a low of 60% in 2009.
The new report said that within the risk equity allocation, private equity has undergone the biggest shift over the last decade, rising from a low of 10% to the current 23%. Also noteworthy is that private equity in the first quarter topped the public equity allocation for the first time.
“Our members' unique skill sets and experience, as well as their tolerance for risk, allow them to participate more aggressively in the private equity markets,” TIGER 21’s founder and chairman Michael Sonnenfeldt said in a statement. The vast majority of members are first-generation wealth creators, he noted.
“In the past decade, we have seen TIGER 21 members double their investment allocations to private equity. It isn't surprising that when challenged by a negative real interest rate environment, where you have to take risk of one form or another just to ‘keep up,’ members would rely heavily on what they are most familiar with — private equity and real estate.”
In the first quarter, the hedge fund allocation rose by one percentage point to 8%. The allocation to real estate declined by two points to 25%, the biggest move among asset classes in the quarter, and the allocation to public equity fell by one point to 22%.
Cash allocations held steady at 10% in the January to March period, and fixed income increased by one percentage point to 11%.
TIGER 21’s quarterly allocation report measures the aggregate asset allocation exposure of its 400 members who manage some $40 billion in personal investible assets.
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