Ultra-high-net-worth individuals are regaining confidence in public and private equities, and moving away from hedge funds. according to a survey of Tiger 21 members.
Investments in private equities are at a higher level now than they have been at any point since Tiger 21 began its member survey in 2007, according to the organization.
Member investments hit a low point in 2010, but have since made a gradual comeback, representing 19 percent of member allocations at the end of 2012, Tiger 21 says. The previous high mark was 12 percent in 2007, while the low point was 9 percent in 2008 and 2010.
Allocations to hedge funds were at 7 percent at the end of 2012, down from 9 percent at the beginning of the year and a high of 12 percent in 2007.
Tiger 21 is a networking organization for ultra-high-net worth-individuals with at least $10 million in liquid assets.
“Conditions are such that high-net-worth individuals are reallocating their portfolios,” says Michael Sonnenfeldt, founder and chairman of Tiger 21. “Over the last year, Tiger 21 members have committed to growing their positions in private and public equity and the asset allocation numbers bear this out.
“The increase in private equity is an historic shift and indicates that our members believe the way to create wealth over the long term is in the investment in equities, in particular through private equity,” he adds.
“This definitely shows a renewed confidence in equities. The ultra-wealthy tend to be contrarians, so they invest where they see opportunities and they are ahead of the curve,” says Thane Stenner, managing director Tiger 21 Canada.
Investments in public equities have also been growing since 2010, with 24 percent of member allocations devoted to thsi category at the end of 2012, according to Tiger 21. That's up from 18 percent in the first quarter of 2010.
Real estate allocations were at 21 percent at the end of last year and fixed-income was at 14 percent.