An overwhelming 91 per cent of respondents to Tiger 21's year-end survey thought the overall financial markets’ performance in 2013 was better than expected. However, members aren’t quite as upbeat about 2014.

An overwhelming 91 per cent of respondents to Tiger 21's year-end survey thought the overall performance of the financial markets in 2013 was better than expected. However, members of the US network for high net worth investors aren’t quite as upbeat about 2014.

Tiger 21 members indicated that their own portfolios exceeded expectations last year, with 62 per cent saying that the performance of their investments beat their expectations and another 27 per cent indicating it was as expected. Only 11 per cent said performance was worse than expected.

Tiger highlighted that many professional money managers were quite bearish on what to expect in the stock markets entering 2013, so the positive responses are somewhat unsurprising. Regardless, 66 per cent believe that the overall performance of the markets will be worse this year, while 26 per cent anticipate it will be about the same and just 8 per cent think it will be better than 2013.

Asset classes of choice

When asked which asset classes they are most enthusiastic about for 2014, the top four responses were: public equities (27 per cent); private equity (22 per cent); real estate (18 per cent); and hedge funds (11 per cent). All other asset classes received less than 10 per cent of votes.

“This aligns neatly with the latest asset allocation numbers for TIGER 21 members, which had public equities, real estate and private equities in the top three positions as of the fourth quarter of 2013,” Tiger said.

The organization highlighted that, in its annual Member Favorites Survey, equity-themed investments also took the top spot, followed by private equity and hedge funds, and real estate close behind (view here).

Resolutions

Members were also asked about their personal financial resolutions for 2014, in response to which the following came up most frequently:

•    Holding more cash to be ready for the cycle to change;
•    Changing one’s financial advisor;
•    Moving long-term or liquidity-neutral into partnership funds in a bid to capture illiquidity premiums and outperform decelerating public markets; and
•    Finish the investment strategy for taxable individual investors.

“Coming off a year when the S&P posted an astounding total return of 27 per cent, it is not surprising that members are anticipating a less robust stock market in 2014,” said Michael Sonnenfeldt, founder and chairman of Tiger.

“Most of our members are reasonably diversified across a series of asset classes, and so, on the one hand, their entire portfolio did not grow as much as the S&P, but it also means that if there is a pullback, they will be somewhat insulated as well,” he said.

Sonnenfeldt added that members have “dramatically” raised their exposure to private equity. While they have done this through funds, they have most notably invested directly in small private companies - “often getting personally involved.”

In April last year, Tiger 21 said members were capitalizing on their personal experience in private equity in the belief that “over the long term it represents some of the best opportunities to preserve and build capital.” (Allocations to private equity among members' portfolios reached a historic high last year, having jumped from 10 to 15 per cent, for example.)

“Because private forms of equity are where most of our members created their wealth, the buoyant markets have encouraged them to keep building private companies, which often have as the end game to go public or sell out,” Sonnenfeldt said.

“So while our members remain concerned about how much further public markets can grow, and some are concerned about a serious pullback, it is clear that investing directly in private companies and real estate – through funds and directly – remains an increasingly important part of their investment strategy.”

Meanwhile, in December 2013 it emerged that private equity is a popular asset class among family offices and foundations, with one in three of respondents to a survey saying they commit at least 20 per cent of assets to the sector. The study, which was carried out in June 2013, found a different pattern among various types of investors, but suggested that family offices and foundations are taking a particularly long-term approach.

Before the 2008 financial crisis, the private equity sector was buoyed by plentiful credit but witnessed a buyout boom. The sector went sour when bank leverage sharply contracted, leaving many investors sitting on unused cash, hitting internal rates of return. Recent figures and industry research - like Tiger's year-end poll - suggested that the sun is once again shining on the sector.

About Tiger

Tiger 21 has more than 220 members managing over $20 billion in total assets. In addition to several groups in New York, the organization also has a presence in Dallas, TX,  Los Angeles, CA, Miami, FL, Palm Beach, FL, San Diego, CA, San Francisco, CA, Seattle, WA, Chicago, IL, Tysons Corner, VA, and Washington, DC, as well as Canadian groups in Toronto, Montreal, Calgary and Vancouver.

Members are typically entrepreneurs, chief executives, inventors and other senior executives with backgrounds in financial services, real estate, industrial and consumer goods, legal services, entertainment and medicine.

The groups meet monthly to share investment ideas and experiences on a range of wealth-related issues. Members also have access to investment opportunities including private equity, real estate and hedge funds.