Investments in private equity and real estate gained ground this year with members of Tiger 21, an investment club for the ultra-wealthy, according to the Tiger 21 Member Favorites Survey released Monday.
Public equities are still the favored investment vehicle, but it declined in preference. Thirty-five percent of Tiger 21 members favor public equities this year compared to 41 percent in 2013.
Private equity gained 2 percent to come in as the favorite for 19 percent of the members and real estate gained 1 percent to come in third place at 16 percent, the survey says.
For the first time, the survey asked members how their private equity allocations break down. Sixty-three percent of private equity investment is allocated to direct investments in members’ own companies, another 17 percent went to private companies that are not their own, and the remaining 20 percent goes to funds.
“Private equity continues to be a growing focus for our members and for good reason. Members feel that investing in private equity is something they understand because so many members created their wealth in private companies,” says Michael Sonnenfeldt, founder and chairman of Tiger 21.
Tiger 21 has 290 members who manage $30 billion in wealth.
“Also, members like the superior access to information in private companies, so they are often among the first to learn about problems so they can pitch in and help solve them,” he adds.
For real estate, residential real estate investments are the favored vehicle, over commercial.
The most common public equity investment is individual stocks at 43 percent, a 7 percentage point decrease from 2013 and a full 14 points below 2012. ETFs, at 25 percent, gained four percentage points from last year, followed by mutual funds/long-only funds at 17 percent and hedge funds at 14 percent.
The most popular equity sectors, according to respondents, are financials, followed by consumer discretionary and energy, technology and health care.
Tiger 21 says Apple and Berkshire Hathaway again swapped spots for favorite single-stock pick, with Apple reclaiming the top position. The next three favorite equity picks were SPDR S&P 500 ETF, Health Care SPDR ETF and iShares MSCI Emerging Markets ETF.
“Our members are long-term investors,” says Sonnenfeldt. “In the case of Apple and Berkshire Hathaway, regardless of which stock comes in on top, their consistent presence on our list shows that our members have a fundamental belief in those companies for the long term.”
Hedge funds lost two percentage points as the favorite for 15 percent of Tiger 21 members, an all-time low. Cash and cash equivalents are the favorite of 2 percent of members, the same as last year.
Asked to name their favorite managers across all types of investments, the top five responses included three repeats from last year and two new additions. Golub Capital Inc. (private equity), Chickasaw Capital Management LLC (equity: MLPs), and Elliott Management Corporation (hedge fund: distressed) remain on the top five list. Newcomers include A.L. Stuart & Co. (equity: MLPs) and Dome Equities (real estate), says Tiger 21.
