The ultra-high-net-worth members of Tiger 21 have increased their asset allocations to real estate during the first quarter of 2015, continuing a trend that has been prevalent for several years, the group says in a report released Monday.
The group's latest ssset allocation peport shows members increased their investments in real estate by two percentage points, bringing it to 29 percent and representing the highest allocation to real estate since Tiger 21 began tracking member portfolios in 2007.
Tiger 21 members have long had a higher-than-average exposure to real estate due in part to the fact that that is where many made their wealth, said Michael Sonnenfeldt, Tiger 21 chairman and founder. Tiger 21 has 300 members in North America who have a total of $30 billion in investable assets.
In a survey of Tiger 21 members, half of the respondents said they plan to increase their allocation to real estate in the second quarter, while 38 percent plan on maintaining their current allocation. The only other asset category with many members planning to increase their holdings is private equity. Forty-four percent of respondents plan on increasing or maintaining their exposure to private equity, while only 12 percent plan on decreasing it.
Fixed-income allocations dropped one percentage point to 11 percent during the first quarter, the lowest allocation level for the asset class since Tiger 21 began collecting data.
“Generally, members are cautious on fixed income because of the low returns and potential for interest rate increases that would dramatically lower bond values,” said Sonnenfeldt.
Looking ahead, members with a bearish outlook over the next 12 months outnumber bullish members 59 percent to 41 percent. Among the specific concerns of the bears are the likelihood of rising interest rates in the second half of this year and the potential that terrorism will disrupt markets.