TIGER 21 Annual Survey Unveils Top UHNW Investment Strategies

Eliane Chavagnon

23 October 2013

Members of the exclusive TIGER 21 ultra high net worth peer network have ranked public equities as their preferred investment for the fourth consecutive year, according to the organization’s Member Favorites Survey for 2013.

The share of wealthy US investors allocating most favorably to this asset class increased from 31 per cent in 2011 to 39 per cent last year and, according to the latest survey, now stands at 41 per cent. However, private equity is playing an increasingly important role, TIGER 21 noted.

“It is not surprising that public equities are among the most favored investments. What is more telling is how members gain exposure to equities,” said Michael Sonnenfeldt, founder and chairman of TIGER 21. “We have seen ETFs gain popularity among members in recent years as evidenced by the first ETF appearing in the top five picks in last year’s survey and a second appearing in the top five picks in this year’s survey.”

This year, individual stock purchases emerged as the most common public equity investment, climbing 7 per cent from 2012 to 50 per cent. After that were exchange-traded funds/index funds, at 21 per cent, while hedge funds and long-only funds claimed joint third place, at 14 per cent each. Hedge funds dropped two percentage points from last year’s survey to 17 per cent and is now five percentage points below its 2011 ranking.

The most popular public equity sectors, according to respondents, are: financials ; technology , ETFs , and consumer . Specifically, members chose Berkshire Hathaway, Apple, iShares MSCI EAFE Index Fund, Qualcomm and SPDR S&P 500 as their top five stocks. This is the first year that the latter two have claimed top spots, while Berkshire and Apple have been “perennial favorites” among members, TIGER 21 said.

Private equity

Meanwhile, 17 per cent of members opted for private equity as their preferred investment strategy for 2013, having intensified their exposure to this asset class through both funds and direct investment into private companies, according to the survey findings.

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.”

According to Sonnenfeldt, the “real story here” is the growth in members’ involvement with private companies, which is driving their exposure to private equity. He noted that members are spending more time backing startups, sitting on boards and getting involved with private companies because “that is where they created their own wealth and they know it can be an engine of growth in their portfolio.”

Other allocations

TIGER 21 said real estate investments maintained fourth position at 15 per cent, but up from 11 per cent last year. Members gained exposure to this asset class through funds as well as direct investments in properties, TIGER 21 said, adding that although ranking fourth among members, it claims the largest allocation, at 21 per cent.

“This represents an example of members’ faith in real estate’s long-term value proposition, even though it doesn’t register as high when members are considering what they are most ‘excited’ about,” Sonnenfeldt said.

Fixed income, meanwhile, received 7 per cent of responses and remained in the fifth spot in category rankings. Municipal bonds were the largest product mentioned, while members also reported a “fairly equal mixture of individual and managed portfolios in this category,” TIGER 21 said.

Cash, cash equivalents and commodities rounded out the bottom of the favored investments, receiving 2 and 1 per cent respectively. Cash allocations hit a high of 17 per cent in the first quarter of 2011. No member mentioned currencies as a favorite category in the 2013 survey.

About TIGER 21

TIGER 21, an acronym for The Investment Group for Enhanced Results in the 21st Century, now has 220 members, which collectively manage over $20 billion in total assets.

The organization has a presence in New York, Los Angeles, CA, San Francisco, CA, San Diego, CA, Miami, FL, Washington, DC, and Dallas, TX, as well as Canadian groups in Vancouver, Toronto, Calgary and Montreal.